The Financial Supervisory Service Launches 'Special On-Site Inspections' Targeting 30 Nationwide Loan Companies

6 Classes, Total 122 Participants Deployed... Largest Scale Ever
Preventing Unfair Debt Collection Ahead of Chuseok Holiday
Also Checking Preparation Status for Personal Debtor Protection Act Implementation

Financial Supervisory Service, Yeouido, Seoul. Photo by Heo Younghan younghan@

The Financial Supervisory Service (FSS) announced on the 4th that it will conduct a special on-site inspection of lending companies for one month starting from the 5th to prevent unfair debt collection practices and to check the preparation status for the implementation of the Personal Debtor Protection Act ahead of the Chuseok holiday.

The FSS will deploy 122 personnel across six teams to inspect 30 lending companies nationwide, the largest number ever, focusing on unfair debt collection practices and the preparation status for the Personal Debtor Protection Act. If any unfair debt collection practices that infringe on people's livelihoods are identified, strict measures will be taken. This decision comes amid worsening repayment difficulties for vulnerable groups due to high interest rates, high inflation, and continued domestic demand recession, as well as deteriorating business environments such as rising delinquency rates among lending companies mainly used by vulnerable borrowers, increasing incentives for livelihood-infringing collection practices.

Additionally, the Personal Debtor Protection Act, which aims to strengthen the rights of individual debtors during the series of processes following delinquency, is scheduled to be enforced on the 17th of next month. Since previous unfair collection practices may be punished as illegal acts under the new law, lending companies need to thoroughly prepare by strengthening internal controls ahead of the law’s enforcement.

The main inspection items include ▲appropriateness of collection procedures ▲management of debt classification subject to the law ▲appropriateness of self-debt adjustment ▲management system for delinquency interest. Specifically, the FSS plans to check whether control systems have been established to comply with the notification procedure before collection and the limit on contact frequency (no more than 7 times in 7 days), whether debt amounts are classified by brackets (30 million KRW, 50 million KRW) to determine the applicability of the Personal Debtor Protection Act, whether procedures for notifying debt adjustment guidance and decisions have been established, and whether the method of imposing delinquency interest upon loss of benefit of term has been improved.

Kim Sohyun, Team Leader of the FSS’s Livelihood Infringement Response Division, stated, "If any illegal acts such as unfair debt collection practices that threaten the peaceful daily lives of debtors are found during the inspection, we will take strict measures and strongly respond by referring serious cases for investigation." She added, "Major deficiencies will be publicly disclosed through press releases to encourage active interest and improvement across the entire lending industry, supporting the establishment of the new system and ensuring the protection of individual debtors' rights."