The Financial Services Commission will move this year to improve the program that supports appointing debtor representatives to stamp out illegal private lending. The debtor representative program has contributed to protecting victims from illegal debt collection as the system has been continuously improved.
On the 14th, the Financial Services Commission (FSC) announced an operating plan for the program to support the appointment of debtor representatives. As one pillar of the plan to eradicate illegal private lending, the debtor representative program is a representative victim-relief system that appoints, free of charge, attorneys from the Korea Legal Aid Corporation (KLAC) for victims of illegal private lending and illegal collections so they can respond to illegal or excessive collections.
Looking at the status of support for debtor representatives, 12,162 applications were received last year, and a total of 23,978 people were supported with 11,083 debtor representative cases. This is a 258% increase compared with 3,249 cases in 2023 and 3,096 cases in 2024. By age group, support was highest last year for those in their 30s (33%) and 40s (26%), and results for those in their 20s and under and those in their 50s increased significantly from the previous year.
Of these, in 10,961 cases, attorneys from the Korea Legal Aid Corporation (KLAC), acting as debtor representatives, responded to creditors' illegal or excessive collection activities. The remaining 122 cases contributed to restoring damages for victims of illegal private lending through free litigation representation (such as claims for unjust enrichment), the Financial Services Commission (FSC) said.
This year's debtor representative program will strengthen initial actions before appointment. Before appointing a debtor representative, Financial Supervisory Service staff will verbally warn illegal collectors that Financial Supervisory Service staff will directly handle the appointment and plan legal action. Warnings will also be issued to collectors operating on social media to prevent gaps in victim protection.
If illegal private lending falls under an antisocial lending contract subject to nullification of principal and interest, a nullification confirmation letter in the name of the governor of the Financial Supervisory Service (FSS) will be issued and notified to the illegal private lender. If there are concerns about physical harm beyond online threats, measures will be pursued to enable faster police protection through administrative linkage with the police.
Management after appointment will also be strengthened. In connection with the one-stop comprehensive, dedicated support system scheduled to be implemented in the first quarter of this year, customized, close support will be provided to victims. When notifying the appointment of a debtor representative, victims will be informed together of a phone number (representative or person in charge) to call if illegal collections recur, along with response guidelines and procedures for reporting damage, and it will be checked regularly whether collections have in fact stopped after the appointment.
Also starting this month, if a victim who used the debtor representative support program continues to face illegal collections, the program can be used again regardless of the number of times or duration. From next month, requirements for applications by related persons will also be eased. If a debtor party cannot apply directly due to psychological pressure, requirements will be effectively improved so that a related person can apply alone without the debtor party's application, allowing the related person to block illegal collections.
The Financial Services Commission, together with related institutions such as the Financial Supervisory Service, the Korea Legal Aid Corporation (KLAC), and the Credit Counseling & Recovery Service (CCRS), said it will prepare to ensure the newly prepared system improvement measures can be implemented without a hitch, while continuing to provide guidance and publicity on how to respond to damage from illegal private lending.