Ruling Party and Government: "Immediate Expulsion of Unqualified Loan Sharks... 3-Year Ban on Reentry"

Nullification of Principal and Interest in Antisocial Loan Contracts Including Sexual Exploitation Debt Collection
Significant Strengthening of Penalties for Unregistered Lending and Maximum Interest Rate Violations
Registration of Online Loan Brokerage Sites... From Local Governments to Financial Services Commission

The People Power Party and the government have decided to establish regulatory measures to enhance the overall soundness of the lending industry by expelling unqualified lenders from the market and restricting their re-entry for a certain period. The party and government will also introduce grounds to nullify principal and interest on antisocial loan contracts, such as sexual exploitation debt collection, along with strengthening penalties for illegal private loans.

Chu Kyung-ho, Floor Leader of the People Power Party, and Kim Byung-hwan, Chairman of the Financial Services Commission, are talking at the Party-Government Council meeting on measures to protect financially vulnerable groups and eradicate illegal private loans held at the National Assembly on the 11th. Photo by Kim Hyun-min kimhyun81@

On the 11th, the party and government held a 'Measures to Protect Financially Vulnerable Groups and Eradicate Illegal Private Loans' meeting at the National Assembly and announced improvements to the illegal private loan system. Kim Sang-hoon, the Policy Committee Chair of the People Power Party, told reporters after the meeting, "Unqualified lenders will be immediately expelled, re-entry will be restricted for three years, and we plan to support the supply of financial services by excellent lenders in the microfinance sector." He added, "I believe the measures prepared at today's party-government meeting will serve as a turning point to fundamentally eradicate illegal private loans and rectify the lending market."

The party and government also decided to strengthen penalties for unregistered lenders and violations of the maximum interest rate to the highest level under financial laws. Penalties for unregistered lenders will be increased from the current imprisonment of up to 5 years and a fine of 50 million won to imprisonment of up to 5 years and a fine of 200 million won. For violations of the maximum interest rate, imprisonment will be increased from 3 years to 5 years, and fines will be significantly raised from 30 million won to 200 million won. They will also establish grounds to nullify principal and interest on antisocial loan contracts concluded due to sexual exploitation debt collection, human trafficking, bodily injury, assault, or threats.

Registration requirements for lenders registered with local governments will also be strengthened. First, the self-capital requirement for individual lenders registered with local governments will be raised from 10 million won to 100 million won, and for corporations, from 50 million won to 300 million won. The party and government will prevent situations where the representative of a lending company holds concurrent positions at other lending companies. Violations of this will result in business suspension and fines.

Management and supervision of online loan brokerage sites will also be strengthened. Previously, local governments were responsible for registering loan brokerage sites, but now the Financial Services Commission will take over registration, with stricter registration requirements. Additionally, the party and government will introduce penalties for providing and distributing personal information for the purpose of using illegal private loans to strengthen information protection.

To raise public awareness about illegal private loan companies, the party and government will change the legal designation of unregistered lenders to "illegal private loan operators." They will also provide warnings about illegal private loans to the public through telecommunications bills and other means, block the opening and use of burner phones for illegal private loan purposes, and strengthen penalties accordingly. Policy Committee Chair Kim added, "The party and government will actively promote swift legislative amendments for system improvements through cooperation, while continuously strengthening investigations, crackdowns, and penalties to eradicate illegal private loans."