The Financial Services Commission announced that a partial revision bill for the Credit Information Use and Protection Act has been approved by the government at the cabinet meeting held on December 17. The revision makes the entry barrier more reasonable for business credit rating service providers, improves the quality of business credit evaluation models by making them subject to a periodic review by an external verification committee, and incorporates into the law the current preliminary approval system for credit information businesses, which has been operating as part of a subordinate regulation.

First, the revision bill abolishes the current investment requirement for financial companies toward business credit rating service providers. Currently, corporate entities that have secured at least 50 percent of investment from financial companies were allowed to apply for licenses to operate as business credit rating service providers. However, considering the need to promote the entry of more businesses that are equipped with various types of business data into the business credit rating service sector, stock companies established as prescribed under the Commercial Act will be newly authorized to operate as business credit rating service providers.

Second, the revision bill will make business credit evaluation models subject to a periodic review by an external verification committee to regularly check their appropriateness and improve quality management. Under the current system, credit evaluation models for individuals and sole proprietors are subject to a periodic review performed by the verification committee operated by Korea Credit Information Services. However, an external review mechanism has been lacking for business credit evaluation models. Thus, this revision bill makes them subject to an external review, which will help to improve the quality management over credit evaluation models.

Third, the revision bill brings into the law the current preliminary approval system that has been operating as part of a subordinate regulation in the legal system. In addition, the rate of additional payment applied on the refund of penalty surcharge will be tied to market rates to make it more reasonable.

This revision bill for the Credit Information Use and Protection Act will be submitted to the National Assembly in December. After being approved by the National Assembly, it will go into effect six months after the day of promulgation. The FSC plans to actively support the legislative process and closely cooperate with the National Assembly to ensure a prompt passage of the revision bill.

* Please refer to the attached PDF for details.