With the government-backed scheme, consumers now can hold diverse financial products, such as cash deposits, funds and stock investments, in a single account with tax exemptions of up to five years on their financial gains.

Tax breaks range from 2 million won ($1,700) to 2.5 million won per person on interest earnings and dividends made from the ISA.

Also, these ISAs will even offer lower tax rates for earnings that exceed the exemption amount at 9.9 percent in taxes, lower than the regular rate of 15.4 percent.

Savers can invest their cash up to 100 million won, 20 million won per year, and they are required to maintain the account for three to five years.

The new scheme is expected to spark a major move in retail money as industry experts expect the market will value over 10 trillion won.

The launch comes as Korean consumers face difficulties in finding asset management tools as interest rates have stayed at record lows for months and baby boomers nearing the end of their working lives seek better ways to handle their retirement savings.

Many Korean savers seemed to leave cash in their current account. According to data from the Bank of Korea, the total amount of funds held by local banks came to 1,319 trillion won at the end of 2015, up 106.7 trillion won from a year earlier.

Low interest rates would normally encourage investors to seek other investment opportunities with higher yields than banks, but they were apparently spooked by growing uncertainties in the local and global markets.

“Lenders and securities firms will gain benefits (by the ISA launch) as it will drive the growth of wealth management market in the long term,” an analyst at LIG Investment & Securities said.

In stark contrast to the government and financial institutions that have been upbeat on outlook for the new scheme, nonprofit organization Financial Consumer Agency has launched a boycott against the ISA products, criticizing the new scheme as being designed to “make financial firms rich, not consumers.”

“After all, over 60 percent of tax exemption benefits will go to financial firms’ commissions. The implementation of ISA should be suspended as it needs thorough reviews on the system and the structure of products,” Cho Nam-hee, chief of the consumer agency, said.

Lenders and brokerages set their commission rate at between 0.1 percent and 1 percent for ISA products.

By Park Han-na (hnpark@heraldcorp.com)