The Financial Supervisory Service asked local government officials nationwide in charge of the lend industry to step up crackdowns on illegal private lending. It again stressed that for loans concluded through assault or threats, or with annual rates over 60%, neither principal nor interest can be collected.
The Financial Supervisory Service (FSS) said on the 22nd it held a briefing at its Yeouido headquarters in Seoul for 77 officials from the 17 metropolitan governments in charge of the lend industry, outlining key provisions of the Lend Business Act and the Individual Debtor Protection Act.
At the briefing, the Financial Supervisory Service (FSS) focused on the "invalidity of antisocial lend contracts" system. Under this system, ultra-high-interest contracts that exceed three times the statutory maximum rate (20% per year), or lend contracts concluded through assault, threats, confinement, or methods that cause sexual humiliation, cannot claim either principal or interest.
Penalties for illegal private lending have also been greatly strengthened. Since the revised Lend Business Act took effect in July last year, the penalty level for illegal private lending has risen from "up to 5 years in prison or a fine of up to 50 million won" to "up to 10 years in prison or a fine of up to 500 million won."
The Financial Supervisory Service (FSS) asked that on-site inspections of local government–registered lenders focus on violations of the maximum interest rate, illegal collections, and whether there are business ties to illegal private lending. It emphasized that if operations linked to illegal private lenders are identified, immediate actions such as referring the case for investigation are necessary.
Regarding recent hacking incidents in the lend industry, it asked for thorough checks on whether registered lenders have established and are implementing security measures, citing growing concerns over customer information leaks.
The Financial Supervisory Service (FSS) plans to continue holding nationwide roadshow briefings in the second half of the year with local governments and the Korea Lenders Financial Association to share revised laws and supervisory cases.