FSC Announces Legislative Notice for Amendments to the Enforcement Decree and Supervisory Regulations of the Loan Business Act
Stricter Registration Requirements and Measures Against Ultra-High Interest Rates to Protect Loan Users
On the 8th, the Financial Services Commission announced that it will conduct a legislative notice for the amendment of the "Enforcement Decree and Supervisory Regulations of the Loan Business Act."
Ahead of the enforcement of the amended Loan Business Act on July 22, the FSC plans to establish delegated matters in subordinate statutes, such as organizing registration and cancellation requirements for loan businesses and setting standards for antisocial ultra-high interest rates.
Key points of the amendment to the Enforcement Decree and Supervisory Regulations of the Loan Business Act include rationally revising the registration requirements for loan businesses and loan brokerage businesses to prevent damages to loan users caused by the proliferation of small-scale loan businesses and illegal operations.
To this end, the self-capital requirements for local government loan businesses and online/offline loan brokerage businesses will be significantly raised. For local government loan businesses, individual self-capital will be increased from the previous 10 million KRW to 100 million KRW, and for corporations, from 50 million KRW to 300 million KRW. For loan brokerage businesses, the capital requirements will rise to 100 million KRW for online and 30 million KRW for offline. Online loan brokerage businesses will be required to have IT specialists and computer systems for protecting personal information, computer data, and responding to security breaches to safeguard loan users' information.
If an antisocial high interest rate is set, both principal and interest may be invalidated. The level of antisocial ultra-high interest rates for loan contracts is defined as cases where the annualized interest exceeds the principal (annual interest rate of 100%). Anyone will be able to report illegal private loan business activities or phone numbers used for illegal loans to the Financial Supervisory Service and others.
Additionally, if a loan business temporarily fails to meet registration requirements but meets them again within six months, an exception to registration cancellation may be recognized.
The Financial Services Commission emphasized that it will guide the industry on compliance through the Financial Supervisory Service and the Loan Association to ensure the smooth implementation of the amendments to the Enforcement Decree and Supervisory Regulations of the Loan Business Act, and will request active cooperation to protect loan users.
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