The Financial Supervisory Service (FSS) will establish a permanent monitoring system for lending companies in collaboration with local governments across the country. This measure aims to prevent illegal dual occupations where representatives of lending companies also hold positions as representatives of other companies or as "branch managers." For the first time, both parties will share non-public information on the lending companies they each manage. It is interpreted that the FSS and local governments are strengthening their mutual cooperation in light of the revised lending business law that will be implemented this month.
According to the financial industry on the 22nd, the FSS has recently established a system to monitor whether representatives of specific lending companies are holding dual positions as representatives or operational executives of other companies in conjunction with local governments. Each local government plans to compile and register a list of operational executives of the lending companies it manages in a computer system soon. Subsequently, the FSS and local governments will grant each other access rights to information and will be able to mutually review the lists of operational executives of the lending companies they manage.
An operational executive refers to a person who manages all operations at a lending company's office. In other words, it is an employee equivalent to a "branch manager" located at offices other than the headquarters of the lending company.
This is the first time that the FSS and local governments will open non-public data about the lending companies they each manage. According to current regulations, the FSS directly manages about 1,000 large lending companies with assets of over 10 billion won, while more than 7,000 others are managed by the local governments where their headquarters are located. For example, a lending company with assets of less than 10 billion won located in Gangnam District, Seoul, is managed by the Gangnam District Office.
Previously, the FSS and local governments only shared basic information such as the names, registration numbers, and representative names of the lending companies they managed through a computer system. However, these pieces of information are known to be publicly available and were underutilized. In contrast, the list of operational executives that the FSS and local governments have agreed to share this time is non-public data not made available to the general public. However, detailed data, including the asset size of lending companies and capital adequacy ratios, will not be shared, and requests for verification must be made through official correspondence.
The background for both parties establishing this system lies in the revised lending business law that takes effect today. The revision explicitly states that representatives of specific lending companies cannot concurrently serve as representatives or operational executives of other companies. This is a measure taken in response to the abuse of the fact that certain small lending companies are exempt from the FSS's rigorous supervision, allowing some operators to split their capital and establish multiple small firms. Excessive numbers of small lending companies have been causing adverse effects in the market.
An FSS official noted, "We have established this system to manage lending companies across the nation more effectively in cooperation with local governments and to ensure that the industry faithfully implements the revised lending business law," adding, "We may consider further information sharing depending on the operational results."