FSS Encourages Early Implementation of Revised Loan Business Act

Loan Business and Debt Collection Industry Briefing Held on the 6th
Key Points of the Personal Debtor Protection Act Also Shared

The Financial Supervisory Service (FSS) urged the industry to cooperate to ensure the early establishment of the revised Loan Business Act, which will take effect in July.

Seoul Yeongdeungpo-gu Yeouido Financial Supervisory Service building. Provided by Financial Supervisory Service

On the afternoon of the 6th, the FSS held a 'Loan Business and Debt Collection Industry Briefing' at its headquarters in Yeouido, Seoul, to disseminate key points and precautions related to the revised Loan Business Act and the Personal Debtor Protection Act.

Kim Seong-wook, Deputy Director of the FSS, explained that the revised Loan Business Act will be enforced starting this July. The Personal Debtor Protection Act has been in effect since October last year and is currently in a grace period until the 16th of next month.

The revised Loan Business Act strengthens penalties for illegal private lending activities from "up to 5 years imprisonment or a fine of up to 50 million won" to "up to 10 years imprisonment or a fine of up to 500 million won," and includes provisions to nullify principal and interest on antisocial loan contracts such as those involving sexual exploitation debt collection.

The Personal Debtor Protection Act grants debtors who are temporarily unable to repay their debts the right to request debt adjustment, such as maturity extensions, from creditor financial companies.

Deputy Director Kim urged, "Under difficult economic conditions such as high interest rates and high inflation, each sector should enhance compliance awareness and strengthen internal controls to faithfully achieve the purposes of the recently enacted and revised laws, including protecting vulnerable borrowers and improving the credibility of the loan business."

He emphasized the need for special caution as financial accidents have occurred recently, including suspicions of Ponzi scheme involvement linked to corporate insurance agencies (GA) in local government loan sectors.

Deputy Director Kim stated, "Going forward, the FSS will take strict measures against market order violations that conflict with public expectations and the social responsibility of finance," and urged, "Each sector should pay special attention and interest to prevent similar cases."

About 250 representatives from loan businesses, debt collection companies, the Loan Finance Association, and the Credit Information Association attended the briefing.