Loan Finance Association: "Loan Businesses Are Institutional Finance... Distinct from Unregistered Illegal Private Finance"

Revision of the Loan Business Act...
"Industry Image Expected to Improve"

On July 21, Jeong Seongung, Chairman of the Korea Loan Finance Association, requested that the term "illegal private finance" be used to refer to unregistered illegal loan operations.

The association announced that, starting the following day, the revised Loan Business Act would take effect, making the distinction between institutional loan finance and illegal private finance clearer. This is because the legal revision changes the term "unregistered loan business" to "illegal private finance."

The association believes that the legal revision will serve as a turning point by reducing confusion that may arise in distinguishing between institutional loan businesses and illegal private finance, and by improving public perception of registered loan businesses.

In the past, whenever illegal practices related to loan operations occurred, the term "illegal loan business" was commonly used regardless of whether the business was registered. As a result, the public found it difficult to clearly differentiate between loan businesses officially registered with the government and unregistered businesses operating illegally.

This mixing of terminology led to registered loan businesses being mistaken for illegal loan businesses. Consequently, this has resulted in the unintended side effect of financially vulnerable individuals turning to illegal private finance instead.

The association has also communicated the details of the legal revision to related institutions, including the National Police Agency and the courts, and has officially requested that the term "illegal private finance" be used for unregistered illegal loan operations in the future.

Chairman Jeong emphasized, "Going forward, the association will strive to improve the image of the loan business through measures such as name changes, and will work to create an environment in which financially vulnerable individuals can use loan finance services with confidence."