FSS moves to cut investment product sign-up time in half

The Financial Supervisory Service announced Thursday it has drawn up a plan to streamline the enrollment process for investment products.

The FSS aims to cut the time needed to sign up for a new investment product from roughly one hour to between 30 and 40 minutes by simplifying paperwork, improving investor information verification procedures, and rationalizing disclosure obligations.

Investment products are financial instruments that carry the risk of principal loss, with any gains or losses borne by the investor.

The number of documents required to enroll in an investment product will be reduced from about 17 to 10. Financial firms will be required to classify enrollment documents into core and supplementary categories, and documents that serve similar purposes will be consolidated.

Three documents will be designated as core: a transaction and account-opening application, an investor information form, and a contract or enrollment application combined with a key-terms confirmation. All remaining documents will be classified as supplementary.

The cooling-off confirmation form required for complex financial investment products will be incorporated into the contract or key-terms confirmation. Several documents designed to protect elderly investors — including a senior investor consultation record, a high-risk product enrollment confirmation, and a designated-contact notification form — will in principle be merged into a single document.

The number of required handwritten signatures will fall from about 17 to between three and six. Once a customer signs the core documents, separate signatures on supplementary documents will generally not be required, provided those were reviewed in advance. The practice of requiring repeated signatures for individual items within a single document will also be discontinued.

Documents that require signatures under specific laws — such as personal credit information consent forms and key-terms confirmation forms — will still require separate signatures.

Mandatory handwritten transcription will also be shortened. The current requirement of roughly 163 characters will be trimmed to about 51, focusing on essential words covering key information. Documents that do not affect the conclusion of a contract or are not legally required will be recommended for elimination.

Investor information collection and risk-profile assessment procedures will also be streamlined. Customers will be allowed to complete investor information forms remotely before visiting a branch or while waiting for a consultation. Once at the counter, they will be able to proceed immediately to suitability assessment results, account opening and other follow-up steps upon meeting with a sales representative.

Product explanations will be restructured to focus on key information. The FSS plans to place details most relevant to investment decisions — such as possible disadvantages and how a product differs from similar offerings — at the front of disclosure documents so they can be explained first, taking into account the characteristics of each financial product.

The FSS plans to have individual financial firms begin implementing the improvements next year, following revisions to industry self-regulatory rules, IT system development and updates to internal guidelines.

"We plan to encourage swift follow-up action by monitoring each financial firm's implementation schedule, and will continue to identify additional improvements through simulated enrollment procedures to verify actual sign-up times under the new framework," an FSS official said.