The Financial Supervisory Service is promoting support in the form of on-site inspections or lectures to strengthen the monitoring capabilities of local governments regarding lending companies. This aims to enhance cooperation with local governments for efficient management and supervision of lending companies following the amendment of the Lending Business Act.
According to the financial industry on the 23rd, the FSS plans to conduct on-site investigations of lending companies in a certain local government in cooperation with it during the second half of the year. An FSS official will carry out the on-site inspections of the lending companies in that area, with a local government official accompanying to assist with the work. Through this inspection, the FSS will also deliver to local governments a focus on checking not only basic aspects such as the existence of an office or regular registration of lending companies, but also accounting aspects such as compliance with capital requirements.
In addition, the FSS plans to dispatch its officials to some areas during the second half of the year to provide direct lectures on the main contents of the amended Lending Business Act and supervisory guidelines. It is reported that there were requests from some local governments to give lectures on supervisory methods before and after the amendment of the Lending Business Act.
The amendment to the Lending Business Act, which took effect the previous day, focuses on strengthening the management of lending companies. It limits the validity of illegal lending contracts that involve violence or threats, and increases the capital requirements from 10 million won to 100 million won for individuals, and from 50 million won to 300 million won for corporations. Penalties for illegal private loans have also been strengthened. The overall law has been strengthened due to a series of recent issues related to illegal lending.
Among more than 8,000 lending companies nationwide, only about 1,000 are directly managed by the FSS. The remaining over 7,000 must be managed by local governments with limited personnel. Lending companies supervised by local governments are not only excluded from the FSS's high-intensity supervision targets but also tend to be smaller and have a relatively high incident rate. This is why the FSS has come forward to support local governments in managing and supervising lending companies.
An FSS official noted, "There are many opinions that local governments, which are not financial specialized institutions, have limitations in closely inspecting the detailed aspects of lending companies, so we have decided to pursue this cooperation."