FSC Urges Lending Companies to Join Sae-Do-Yak Fund Agreement

Joint Meeting of Relevant Agencies
'Sae-Do-Yak Fund Lending Business Trend Review Meeting' Held
"Strengthening Oversight to Protect Debtors Amid Concerns Over Excessive Collection"

The Financial Services Commission has encouraged lending businesses, which hold 30% of the bonds eligible for purchase by the Sae-Do-Yak Fund, to join the fund agreement. The commission also plans to strengthen oversight and management to protect debtors, aiming to prevent excessive collection practices by non-participating lending companies.

On January 19, the Financial Services Commission held a joint meeting to review trends among lending businesses related to the Sae-Do-Yak Fund, chaired by Kim Donghwan, Director General of the Financial Consumer Bureau. The meeting was attended by related agencies such as the Financial Supervisory Service, Korea Asset Management Corporation, and the Korea Lending Finance Association. The Sae-Do-Yak Fund is a debt adjustment program designed to help economically vulnerable borrowers who have been in arrears for more than seven years by restructuring or extinguishing their debts to support their financial recovery.

Among the 680 billion won in long-term delinquent bonds (over seven years and under 50 million won) held by the lending industry, approximately 490 billion won of bonds-excluding those already under debt restructuring-are eligible for purchase by the Sae-Do-Yak Fund. This accounts for a significant portion (about 30%) of the total eligible bonds, which amount to 1.64 trillion won.

During the meeting, it was agreed that the Korea Lending Finance Association and the Korea Asset Management Corporation would actively persuade and encourage lending businesses to join the Sae-Do-Yak Fund agreement, leveraging incentives such as allowing bank borrowing. In addition, the parties decided to address concerns about excessive collection practices by some non-participating lending companies and to strengthen oversight and management to protect debtors. The Financial Supervisory Service plans to begin on-site inspections in February this year, targeting illegal collection and other business practices that harm the public by debt collection agencies handling purchased bonds. If violations are found, strict sanctions and guidance for improving business practices will be implemented.

The Financial Services Commission stated, "Going forward, we will continue to expand lending businesses' participation in the agreement through ongoing communication with the industry, while also strengthening cooperation with relevant agencies to ensure that debtors are protected from excessive collection and other potential harms."