Ensuring Full Protection of Loan Users' Rights
Policy for On-Site Inspections When Necessary... Urging Active Efforts to Expand Credit Supply
Requesting Cooperation to Eradicate Illegal Private Loans and Financial Crimes
Amid rising market uncertainty due to the emergency martial law situation and the impeachment political turmoil, which is likely to exacerbate difficulties for ordinary citizens and vulnerable groups, the Financial Supervisory Service (FSS) convened CEOs of the lending industry to urge them to thoroughly protect the rights and interests of loan users. In particular, it conveyed its policy to conduct on-site inspections if necessary and take strict measures if illegal activities are confirmed.
On the 19th, the FSS held a meeting chaired by Kim Sung-wook, Deputy Director of the Consumer Finance Division, with CEOs of lending and loan brokerage companies and the Korea Financial Investment Association, announcing these points. The meeting was attended by CEOs of 21 lending and brokerage companies, including Leadcorp, Baro Credit Loan, Nexgen Finance Loan, and A-One Loan Capital.
The FSS first emphasized the need to strengthen protection for loan users and internal controls to prevent predatory debt collection and other illegal or unfair practices exploiting the recent unstable political and market conditions.
Deputy Director Kim said, "Please improve work procedures to eradicate illegal and unfair debt collection practices that destroy the peaceful daily lives of ordinary people, such as seizure of essential home appliances targeting socially vulnerable groups, and sale and collection of claims with expired statutes of limitations." He added, "We will closely monitor compliance with laws and internal controls of lending companies and conduct on-site inspections if necessary, taking strict action against illegal activities."
He particularly urged active efforts to expand credit supply centered on excellent lending companies in the microfinance sector to prevent ordinary and vulnerable groups from being driven to illegal private loans. He also emphasized compliance with related regulations, such as fulfilling various notification obligations to debtors and establishing internal standards, to ensure the Personal Debtor Protection Act is properly implemented in the industry.
Deputy Director Kim urged, "Please strengthen debtor guidance on the newly introduced self-debt adjustment system under the law to provide appropriate support to economically struggling ordinary citizens, actively introduce various debt adjustment measures, and strive to revitalize the debt adjustment system."
He also requested cooperation to eradicate financial crimes such as illegal private loans. The FSS believes that illegal private loan crimes are being systematically conducted through non-face-to-face methods targeting unspecified many, maliciously and continuously harming people's livelihoods.
Furthermore, he added that it is necessary to prepare countermeasures to prevent voice phishing damages targeting the elderly, who are induced to take loans secured by old assets such as houses from lending companies, threatening their retirement life.
Deputy Director Kim said, "It is necessary to prevent online loan brokerage sites from being exploited as channels for illegal private loans by prohibiting illegal loan advertisements and brokerage by illegal private loan operators and strengthening personal information protection." He added, "As a self-regulatory organization, the association should faithfully perform its legally assigned roles, such as guiding and recommending member companies, monitoring illegal loan advertisements, and providing compliance education to lending company executives and employees."
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