South Korea’s financial watchdog has ordered local financial firms to return to their investors up to 80 percent of the losses they suffered from high-risk derivatives linked to the interest rates of overseas countries. 

The financial dispute-settlement committee of the Financial Supervisory Service(FSS) announced the decision on Thursday, pinning much of the blame for the losses from the derivatives-linked fund(DLF) products on the sellers for being irresponsible. 

With the decision, those who have suffered a loss from a DLF investment will receive between 40 percent and 80 percent of their loss back from the sellers. 

It marks the first time that the FSS has ordered such a high rate of compensation from sellers in any dispute deriving from local financial investment. 

The FSS said while it previously determined such compensation based just on illegality committed by individual marketers at seller companies, it decided this time to hold the companies responsible as a whole for their excessive profit-seeking strategies and lack of internal regulations. 

It also justified the decision by citing companies’ highly disturbing practices such as the arbitrary classification of their clients as risk-takers so they could sidestep their responsibility selling high-risk products and avoid providing proper explanations about the related risks. 

The compensation will be made if both concerned investors and sellers accept the watchdog’s mediation within 20 days. 

Over 200 billion won worth of losses were confirmed between early August and November eighth with an average loss ratio standing at 52-point-seven percent. Some investors lost over 98 percent of their investment.