415 Policyholders Arranged to Lend 111.3 Billion Won
29.4 Billion Won Remains Unrepaid
The Financial Supervisory Service announced on December 22 that it had uncovered the systematic involvement of corporate insurance agency (GA) agents in loan company Ponzi schemes and consequently revoked the registration of the relevant GA.
The Financial Supervisory Service explained that, after allegations surfaced that agents from PS Fine Service had participated in a Ponzi scheme run by the loan company PS Financial Loan, it conducted an on-site inspection and imposed the highest level of sanctions, including registration cancellation.
It was confirmed that a total of 67 people, including the GA’s CEO and agents, were involved in arranging for 415 insurance policyholders to lend a total of 111.3 billion won to the loan company. Approximately 29.4 billion won has not been repaid, resulting in significant consumer losses.
The Financial Supervisory Service determined that the GA had systematically mobilized agents to broker customers’ monetary loans, an act that constitutes prohibited loan brokerage under the Insurance Business Act, and therefore revoked its registration.
For eight executives, including the CEO, the agency requested personnel actions ranging from recommendations for dismissal to suspension, depending on their level of involvement. The 67 employees and agents implicated in the illegal activities were reported or referred to investigative authorities.
The Financial Supervisory Service is reviewing measures to apply relevant regulations and include such cases under commission regulations, as there is a risk that providing loans to agents at zero or low interest rates could be abused to circumvent settlement support grant regulations.
If a GA repeatedly lends money and receives interest in a manner that is not exceptional or temporary, and generates profits exceeding the interest that would be earned from bank deposits, the agency will consider this a business activity and classify it as operating a loan business.
The agency also plans to regard GAs as engaging in loan brokerage if they repeatedly arrange loans between agents and loan companies.
A Financial Supervisory Service official stated, “In the future, when agents involved in loan brokerage move to another GA, we will strengthen compliance monitoring and internal control processes, including requiring the new GA to thoroughly verify the agent’s compliance and obtain a compliance pledge.”
The official added, “There is a need for management and supervision of various support fund systems operated by GAs that have the nature of loans, and we will prepare corresponding response measures.”
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