FSS Requests Online Loan Product Firms to Strengthen Consumer Protection

Financial Supervisory Service Holds Meeting with Online Loan Product Sales Agents and Intermediaries
Urges Self-Inspection and Correction of Algorithms that May Disadvantage Consumers

The Financial Supervisory Service announced on May 11 that it held a meeting on May 9 at its headquarters in Yeouido, Seoul, with online loan product sales agents and intermediaries (online loan brokerage corporations).

According to the Financial Supervisory Service, some cases were identified where the operation of algorithms for comparing and recommending loan products could potentially disadvantage consumer choice. The agency explained that it has guided online loan brokerage corporations to conduct self-inspections and make corrections as necessary.

The Financial Supervisory Service specifically requested that companies apply additional consumer-friendly criteria when interest rates and limits are the same. The agency added that it asked companies to prevent cases where, in the absence of clear sorting criteria when interest rates and limits are identical, products with higher brokerage commission rates, products from certain business sectors, or pre-registered products are displayed at the top, resulting in sorting based on criteria unrelated to consumer benefit or disadvantage.

The agency also urged companies to ensure that consumer choices are not distorted by exaggerated advertising. It requested that companies avoid inducing consumers to select products with unfavorable interest rates or limits, or restricting consumer choice through exaggerated promotions using statistics with low representativeness. In addition, the agency asked companies to ensure that irrelevant products are not displayed in search results when comparing loan products.

A representative from the Financial Supervisory Service stated, "We will respond strictly and take action against any improper business practices, such as arbitrary changes to algorithms or infringement of consumer choice for company profit, in the future." The representative also emphasized, "We plan to improve the algorithm review items and verification methods through consultation with relevant institutions, and enhance the effectiveness of the system through regular inspections."