Australia’s Financial Services Council has offered to help the Korean government set up an investment office on its shores to drive trade in financial services between the two nations.

The council – which represents domestic asset managers, superannuation funds, life insurers, advisory networks and trustee firms – made the offer at a forum in Seoul this week, where it led a delegation of Australian fund management representatives.

John Brogden, the council’s chief executive, told the forum that the greatest barriers to trade in financial services between the two nations were not technical or legal, but relate to culture and relationships.

It comes after the two nations signed a free-trade agreement last December, with full implementation expected by the end of this year, as reported. South Korea is Australia’s third largest export market, but to date financial services have made up a small part of that.

“This forum and this trade mission are examples of the kind of relationship building both industries need to do if we are to turn the free-trade agreement into greater financial services trade and investment,” Brogden declared, speaking from the Seoul offices of Korean trade association Kofia.

Both Australia and Korea were among the four initial signatories to sign up to the Asia Region Funds Passport initiative at the Apec summit in Bali last year. This scheme is not due to be implemented until 2016. The Philippines and Thailand have subsequently joined the consultation process.

Questions have been raised in Asia’s fund management community about demand for this scheme, whether Australian investors would genuinely be interested in Korean funds, and vice-versa.

Brogden acknowledged that the absence of a deep market for Australian dollar-Korean won exchange and a consequent lack of currency hedging services was a technical issue holding back greater trade in funds management services.

But he pointed to state institutions such as the $430 billion National Pension Service and $72 billion Korea Investment Corporation as a significant opportunity for Australian fund managers.

In the same breath he highlighted the opportunity for Korean investors to access Australian equities, bonds, infrastructure and other assets directly as appealing, notwithstanding the need for tax relaxations.

But Brogden suggested that lack of information about Australia as an investment destination was holding back growth in trade in financial services between the two countries.

Highlighting investment offices that Korea has established in both the US and UK, he said these had helped to reduce the gap in information available to Korean investors directly.

“There is no equivalent Korean investment office in Australia,” stressed Brogden. “As a result, EU and US fund managers have an advantage over Australian fund managers.”

He reckoned that the establishment of a similar office in Australia would provide for direct relationships between NPS, KIC and Australian fund managers and, in turn, facilitate the development of deeper currency hedging services.

“The FSC would welcome the opportunity to assist the Korean government in establishing an investment office in Australia,” he concluded.

The ARFP initiative is one of three planned cross-border fund passport schemes in Asia Pacific, with mutual recognition between Hong Kong and China first announced in January last year, with an Asean scheme to include Singapore, Malaysia and Thailand unveiled later last year. Both of these latter schemes are expected to be initiated this year, more than a year ahead of ARFP.

The FSC-led delegation included Australian delegates from Russell Investments, Tyndall Investment Management, La Trobe Financial Services, Legg Mason, CFS Global Asset Management, Schroder Investment Management, Vanguard Australia, Apir Systems, BT Financial Group, K&L Gates and Morningstar.