Financial authorities have recently warned investors to pay attention to an increasing number of investors filing complaints alleging that there has been a major loss in a certain money trust.
On the 23rd, the Financial Supervisory Service informed consumers that “the principle of a certain money trust is not unconditionally guaranteed.” The bank’s specific money trust account increased by 64% from 170.2 trillion won in 2016 to 278.5 trillion won last year.
A specific money trust is a product where a customer entrusts money to a financial institution and designates it to invest in a specific product, and then the financial institution manages it and distributes profits. In other words, which product to invest in is more important than which financial institution you sign up with.
The Financial Supervisory Service said that even if a bank subscribes to a specific money trust, the principle is not guaranteed, and in particular, there are special money trusts that incorporate derivatives such as index-linked ELS stock are high risk products. Specified money trusts are not subject to depositor protection, which guarantees up to 50 million won.
The data that users check and fill in when subscribing to a specific money trust is not only data to confirm the investor’s intention to subscribe and the content of the contract, but also data to prove whether the product was usually sold when a problem occurred.
Consumers should not only trust the words of the sales staff and sign, but should check the contract and product description directly and fully understand them before deciding whether to sign up for the product or not.
When registering for a foreign currency deposit through a specific currency trust, it is necessary to check not only the interest rate conditions but also whether to hedge against exchange rate fluctuations. During a period of falling exchange rates, foreign exchange losses can exceed interest income.
An official from the FSS said, “Even if a customer demands an incomplete sale from the bank, it is difficult to identify incomplete sales if the item ‘I heard and understood the explanation about the product’ is written by hand or signed at registration and there is a record of answering the same in a telephone call.” he said.
