South Korea’s financial watchdog vowed Sunday to stamp out ill-advised sales promotion of offshore retirement plans through unauthorized online channels such as social media.

The Financial Supervisory Service also pledged to monitor such sales activities online and issued the mildest level of alert to consumers to protect them.

This comes as the online sales promotion of offshore life insurance schemes including retirement plans from outside Korea, such as Hong Kong, became widespread without proper notice to consumers here. An offshore insurance plan refers to a product sold by a foreign insurance firm without a license in Korea.

According to the FSS, the schemes posted online promised the consumers a 6-7 percent interest that compounds each year, a foreign currency arbitrage income, or up to 40-fold return by buying the insurance, which are all deemed illegal. The online posts also failed to explain that buyers of offshore insurance plans are not protected under the Insurance Business Act.

A foreign insurance firm is required to present related documents to the FSS to gain approval to promote and sell its products. But none of the promotional posts spreading online were authorized by the financial watchdog.

The FSS added that a consumer who bought unauthorized foreign insurance products may also be subject to up to 10 million won ($8,100) fine.

By Son Ji-hyoung (consnow@heraldcorp.com)