[Reporter’s Notebook] Debtor Protection Act Passed in 23 Minutes, Was Side Effect Review Conducted?

“Once the new law is implemented, financial companies will refuse loans to anyone with even a slight possibility of delinquency, which will only make life harder for ordinary people who have nowhere else to borrow money.”

Concerns are being raised over the “Act on the Management of Personal Financial Claims and Protection of Personal Financial Debtors (Personal Debtor Protection Act),” expected to pass the National Assembly plenary session on the 8th. Although it carries the label of “debtor protection,” critics argue that it could actually put ordinary people trying to borrow money in a more difficult situation.

The core of the Personal Debtor Protection Act is to grant personal debtors the right to request debt adjustment and suspension of collection, and to prohibit financial companies from charging delinquency interest. In other words, even if the debtor does not repay the money, financial companies cannot impose collection or delinquency interest. In this case, what choice will profit-seeking financial companies make? They will likely raise the loan threshold for ordinary people with a high risk of delinquency. Some may even stop lending operations altogether. Vulnerable borrowers who are pushed out of primary and secondary financial institutions or loan businesses will have no choice but to turn to illegal private loans.

The two major parties, which had repeatedly been at an impasse, have become “one body” for the first time in a while. The National Assembly’s Standing Committee on Political Affairs, the relevant committee, held a plenary meeting on the 30th and passed the bill in just 23 minutes. Despite industry and academic warnings about industry confusion and harm to vulnerable groups, no opposition was raised during the discussion process. The public hearing required when enacting laws was also omitted by bipartisan agreement. Since there is no disagreement between the ruling and opposition parties, passage through the Legislation and Judiciary Committee and the plenary session is also expected. Some voices criticize this as a move to appeal to ordinary voters ahead of next year’s general election.

As high interest rates and economic slowdown continue for a long time, a law protecting delinquent debtors from excessive collection and delinquency burdens is necessary. However, if the bill is passed without reviewing its side effects, a huge legislative cost bill will follow. A lawmaker’s remark that “if there is a problem, we can amend it later” sounds irresponsible. Before facing results that go against the legislative intent, careful review of the legal provisions is needed.