Financial Authorities Provide Free Support for Illegal Debt Collection Victims Including Legal Representation

[Asia Economy Reporter Kim Hyo-jin] On the 21st, the Financial Services Commission signed a Memorandum of Understanding (MOU) for the 'Debtor Representative and Litigation Lawyer Free Support Project' at the Financial Supervisory Service (FSS) in Yeouido, Seoul, together with the FSS, Korea Legal Aid Corporation, and the Korea Inclusive Finance Agency.

Attending the signing ceremony were Sohn Byung-doo, Vice Chairman of the Financial Services Commission; Lee Sang-je, Deputy Governor of the FSS; Lee Sang-ho, Secretary General of the Korea Legal Aid Corporation; and Lee Gye-moon, President of the Korea Inclusive Finance Agency.

The financial authorities plan to provide legal services such as representing debtors throughout the collection process through lawyers from the Legal Aid Corporation to protect financial consumers from illegal debt collection and other abuses. They also intend to represent victims in lawsuits for claims of return, damages, and confirmation of non-existence of debt caused by loans exceeding the maximum interest rate and illegal debt collection.

Those eligible for support include individuals who have suffered or are at risk of suffering illegal debt collection from loan companies and those who have taken out loans exceeding the maximum interest rate (24% per annum). Considering the principle of beneficiary pays and financial capacity, applicants must have an income at or below 125% of the median income.

The project to appoint debtor representatives for victims of unregistered loan companies will provide full support regardless of income requirements from the perspective of protecting crime victims.

Provided by the Financial Services Commission

From the 28th, immediately after the Lunar New Year holiday, applications for debtor representatives and litigation lawyer support can be submitted through the FSS and the Korea Legal Aid Corporation. Starting in March, the financial authorities plan to enhance convenience by establishing an online application system.

Additionally, application channels will gradually expand to allow applications through local government call centers and frontline police stations.

According to the financial authorities, the scale of illegal private financing in South Korea reached approximately 7.1 trillion KRW as of the end of 2018. As of the end of June last year, the scale of loan company usage was about 16.7 trillion KRW. The financial authorities are concerned that the use of illegal private financing by vulnerable groups such as youth, housewives, and the elderly is increasing, which may lead to a rise in damages caused by illegal debt collection.

Sohn Byung-doo, Vice Chairman of the Financial Services Commission, stated, "Through this business agreement, not only will there be preventive measures against illegal activities, but also more practical post-incident damage relief measures will be implemented."