'Eradicating Illegal Private Loans'... Financial Services Commission Prioritizes 'Loan Business Act Amendment'

Meeting to Inspect Field Conditions for Eradicating Illegal Private Loans
Expulsion of Illegal Private Loan Operators Masquerading as Licensed Lenders
Review of Support Measures for Debtor Representatives Regarding Illegal Debt Collection via SNS
Extension of Special Crackdown Period Until October Next Year
Vice Chair Kim So-young: "Illegal Private Loans Have a Negative Impact on Society as a Whole"

The Financial Services Commission (FSC) is prioritizing the passage of the amendment to the Loan Business Act in the second half regular session of the National Assembly to eradicate illegal private loans, which are increasingly becoming non-face-to-face and digitalized and more malicious.

On the 13th, Kim So-young, Vice Chairman of the FSC, visited the Seoul Fair Trade Comprehensive Counseling Center to inspect the field efforts to eradicate illegal private loans and announced this plan. Vice Chairman Kim toured the loan-related counseling site within the counseling center, listened to the voices from the field including recent cases of illegal private loan complaints from professional counselors, encouraged the efforts of the counseling center staff, and attended the 'Field Inspection Meeting for Eradicating Illegal Private Loans' together with related organizations such as Seoul City, the National Police Agency, and the Financial Supervisory Service.

Vice Chairman Kim stated, "The forms of illegal private loans recently threaten not only the debtors but also their young children indiscriminately, causing adverse effects not only on individual well-being but also on society as a whole," adding, "The financial authorities plan to actively participate in the National Assembly discussions to ensure that the legislation is prioritized for enactment in the second half regular session."

Once the Loan Business Act is amended, significant changes are expected in the overall loan business, including registration targets and management and supervision systems. The FSC plans to strengthen registration requirements to eliminate illegal private loan operators who are only nominally loan businesses, while granting a grace period for legitimately operating loan businesses to meet registration requirements. Vice Chairman Kim explained, "If the market order is reorganized focusing on sound and reliable loan operators, trust in the loan business will improve, allowing ordinary citizens to use loan services with greater confidence," and added, "We will also continue to supply policy-based financial services for ordinary and vulnerable groups, such as the Sunshine Loan and small living expense loans, without disruption to alleviate financial difficulties for ordinary people."

Inspections and crackdowns to eradicate illegal private loans will also be strengthened. Vice Chairman Kim emphasized, "Since the majority of loan businesses are subject to local government registration, we ask Seoul City and other local governments to conduct more thorough management and supervision of loan businesses," and stressed, "Law enforcement agencies also need to continue persistent crackdowns and investigations against illegal private loan operators."

Additionally, the FSC will expand support for victims of illegal private loans and strengthen cooperation between the government and financial companies to ensure the stable establishment of the Personal Debtor Protection Act, which has been in effect since last October. Vice Chairman Kim said, "We will expand both legal support, such as lawsuits to nullify illegal loan contracts and free appointment of debtor representatives, and economic support, including linking financial, employment, welfare programs, and policy-based financial products for ordinary citizens," and added, "The government will actively operate the 'Implementation Status Inspection Team' to promptly resolve law enforcement situations and field difficulties."

At this inspection meeting, the current status of the amendment to the Loan Business Act related to the eradication of illegal private loans and improvement of the loan business system, announced through the ruling party-government consultation in September, and preparations for system improvements were discussed. Going forward, the Financial Supervisory Service plans to promptly block illegal loan advertisements and burner phones used as tools for illegal private loan crimes and expand information sharing with investigative authorities and related organizations to ensure that damage reports and tips are quickly linked to investigations. In particular, unqualified loan businesses will be promptly removed to maintain a healthy loan market through supervision.

The Korea Legal Aid Corporation and the Korea Inclusive Finance Agency support victims of illegal private loans. The Legal Aid Corporation is reviewing ways to support debtor representatives for illegal collection through social network services (SNS), which has been increasing recently. The Korea Inclusive Finance Agency plans to supply policy-based financial services at this year’s level next year as well, lowering interest rates on small living expense loans to support the economic independence of vulnerable groups facing livelihood difficulties and expanding the support targets of 'Sunshine Loan Youth' to help low-income young entrepreneurs settle stably.

Furthermore, Seoul City and the National Police Agency discussed inspection and crackdown plans against illegal private loan operators. Seoul City plans to strengthen management and supervision of local government loan operators to actively protect user rights and establish fair trade order. The National Police Agency, considering that illegal private loan damage is still ongoing, decided to extend the special crackdown period until October next year to continue thorough crackdowns on illegal private loans.

Vice Chairman Kim said, "To eradicate illegal private loans, both investigative and policy agencies will join forces to promote these policies," and added, "We ask related organizations to maintain continuous interest, cooperation, and active roles to bring about changes that the public can feel."