Next month’s National Policy Committee meeting and the Financial Services Commission parliamentary audit are expected to examine household loan regulations and the management of high-risk financial products. Key topics include whether lending controls are restricting genuine borrowers, the consistency of loan policies, borrower protection and sanctions for incomplete sales. The National Assembly Legislative Research Service identified household-loan volume management, reduced penalties for incomplete sales of Hong Kong H-index equity-linked securities (ELS) and the introduction of single-stock leveraged exchange-traded funds (ETFs) as major audit issues. The government permitted leveraged ETFs tracking double the daily movements of Samsung Electronics and SK Hynix in the first half of this year to help stabilize the won-dollar exchange rate, but the listings were followed by sharp market volatility. In the two months after their May listing, the market recorded 23 sidecars and five circuit breakers. Authorities responded in July by banning related advertising and tightening pre-education and minimum-deposit requirements. Household loans in the financial sector increased by 38 trillion Korean won from January through August, exceeding the previous year’s full-year increase, while the government raised its annual loan-growth target from 1.5% in April to 3% on the 13th of last month. The audit is also expected to question the reduction of penalties for incomplete sales of Hong Kong ELS from 4 trillion Korean won to 600 billion Korean won, including whether management accountability was sufficient. A financial-industry source said the Financial Services Commission would struggle to avoid questions about real-estate policies and leveraged ETFs after Kim Yong-beom, presidential chief of staff for policy, resigned. The industry is closely watching the audit because it is the first parliamentary audit since the new National Assembly began operating.