Inclusive finance policies are aimed at providing financial support to the most vulnerable and marginalized groups to help them gain new opportunities and get back on their feet, thereby creating a virtuous cycle between financial inclusion and economic growth. A variety of government-sponsored microloan products are available for low-income individuals and those with unfavorable credit records. In addition, debt adjustment programs are available for delinquent debtors, offering an extended payment period, amortization, interest rate reduction and debt reduction. Consumer protection is a key area of inclusive finance policies. In this regard, the new legislation on financial consumer protection passed at the National Assembly in March 2020 aims to protect consumers from misselling and other unfair sales practices of financial companies while strengthening consumer rights and empowering consumers to make informed decisions about their investment and asset management.
Apr 27, 2021
- Change in Reverse Mortgage Rules to Strengthen Entitlement and Expand Property Eligibility
- The government approved the amendments to the Enforcement Decree of the Korea Housing Finance Corporation Act during a cabinet meeting held on April 27. The revisions will go into effect from June 9, 2021. Since its introduction in 2007, the reverse mortgage scheme has played a significant role in providing housing and income stability for the elderly,as ten thousand or more households subscribe to the program each year. In December 2020, the law was amended to expand the property eligibility and introduce a trust-type reverse mortgage and seizure-protected account. The revised Enforcement Decree approved by the government today contains the following provisions. (Automatic transfer of pension entitlement) Upon the passing of the homeowner, the monthly pension entitlement can be automatically transferred to the spouse of the homeowner without having to obtain consent from all of their children, through a trust-type reverse mortgage program. (Expanded eligibility for detached home properties) Owners of detached housing properties who rent out part of their houses can sign up for a trust-type reverse mortgage program, which allows homeowners to receive monthly rentsas well as monthly pension payments. (Seizure-protected account) Up to KRW1.85 million per monthfrom monthly pension payments can be deposited in an account that is protected from seizure to guarantee a steady source of income for the elderly and protect their entitlement. * Please refer to the attached PDF for details.
Apr 26, 2021
- Financial Authorities and Industry Groups Work in Tandem on New Consumer Safeguard Measures
- With the new Financial Consumer Protection Act going into effect about a month ago, the authorities held frequent on-site visits and began to operate a quick complaint processing and resolution system to ensure smooth implementation and help ease burdens on financial institutions. With the new regulations in place, there have been confusions resulting from delays in the sales process, restrictions in the sales of inappropriate financial products, etc. In order to help resolve these issues and make support available, the authorities held on-site visits and meetings in eleven different occasions between March 23 and April 9 and concluded that the confusions are largely a byproduct of customary practices prioritizing transaction convenience. In this regard, the authorities and financial industry groups agreed to formulate a new guideline that can help achieve an appropriate balance between consumer protection and transaction convenience. From March 31, the financial authorities and industry groups began to operate a quick complaint processing and resolution system to provide support. As of April 22, a total of 113 inquiries have been filed and the authorities have already responded to fifty-eight (51.8%) cases. Most inquiries had to do with administrative issues and practical handling of some of the newly introduced measures. Financial institutions have also strengthened efforts to enhance compliance with the new regulations. Financial industry groups are in the process of developing a standardized form of internal control measures within each sector in preparation for the internal control rule that will come into force beginning on September 25 this year. The standardized internal control measures are aimed at changing the culture of excessive competition over performance toward a more consumer-friendly management. The financial authorities will continue to closely monitor the implementation of the Financial Consumer Protection Act and provide necessary support. * Ple
Apr 26, 2021
- FSC to Work on Increasing the Supply of Mid-Range Interest Rate Loans for Mid-to-low Credit Holders
- The FSC announced its plan to increase the availability of mid-range interest rate loans and seek further reduction in lending rates on April 23 as a follow-up measure of the lowering of the maximum legal lending rate. The measures focus on (a) improving rules to channel a vast supply of mid-range interest rate loans to borrowers with mid-to-low credit backgrounds, (b) lowering lending rates by requiring internet-only banks to expand their supply of mid-range interest rate loans, making improvements to the savings banks credit evaluation model and making it easier for borrowers to switch loans, and (c) encouraging nonbanks to provide more mid-range interest rate loans. It is expected that the measures will make available mid-range interest rate loans in the amount of approximately KRW32 trillion to two million individuals and KRW35 trillion to 2.2 million borrowers in this year and the next, respectively. Key Measures I. Improving Rules to Expand the Availability of Mid-range Interest Rate Loans (Credit score requirement for government-initiated guaranteed loan) The government-initiated guaranteed loan thus far had no credit score requirement for borrowers. As a result, about fifty-five percent of borrowers were those with high credit standings in 2020. Therefore, a new credit score requirement will be introduced to channel more than seventy percent of government-initiated guaranteed loans to the borrowers in the lower thirty percentile of credit standing. (Improvement for private sector lending) Until now, only the previously announced mid-range interest rate loans were counted toward the performance of private sector lenders and this resulted in arbitrary counting. Therefore, the authorities will change the scope of mid-range interest rate loans that are recognized by the authorities to be all non-backed credit loans offered at below the maximum interest rate allowed within each sector that are provided to borrowers in the lower fifty percentile of credit standing
Apr 19, 2021
- Debtor Assistance with Legal Representation to Bolster Inclusive Finance
- The FSC announced that the authorities will work to improve the debtor assistance program with legal representation through increased support, better accessibility and stronger coordination with investigative authorities in order to meet the rising demand for assistance and bolster financial inclusion. From January 28, 2020, the debtor assistance program that makes available legal representation service at free of charge began to provide support to the victims of illegal and excessive debt collection practices and the borrowers who took out loans with interest rates exceeding the maximum legal lending rate. In 2020, 632 individuals applied for assistance in 1,429 cases and free legal representation was provided in a total of 915 cases through the Korea Legal Aid Corporation (KLAC). In 893 cases, the KLAC-registered lawyers provided legal representation to stand in place of the debtor in respond to excessive debt collection methods, whereas in 22 other cases, legal representation was provided for filing lawsuits on behalf of debtors for excessive interest rate charge. In 2021, demand for support has increased as legal assistance has already been provided to 881 cases as of the end of March. In addition, a four-percentage-point reduction in the maximum legal lending rate is scheduled to take effect in July 2021. As such, the authorities plan to increase support, improve accessibility for both mobile and on-site applicants and strengthen coordination with the KLAC and investigative authorities to help strengthen financial inclusion. * Please refer to the attached PDF for details.
Mar 31, 2021
- Improving Rules on Credit Business to Expand Financing Opportunities for Lower Income Groups
- The FSC announced its plans to improve rules on credit business to make sure that financing opportunities are sufficiently provided to lower income groups even after the four percentage point reduction in maximum legal lending rate takes effect in July. Along the same line, the authorities will continue to work on the measures to stamp out illegal predatory lending as planned. Key Measures I. Lowering fees to help reduce lending costs The maximum brokerage fees will be lowered by one percentage point. For loans of up to KRW5 million, the fee will be reduced from four percent to three percent. For loans in excess of KRW5 million, the current fee of KRW200,000 plus three percent of the amount in excess of KRW5 million will be reduced to KRW150,000 plus two percent of the amount in excess of KRW5 million. II. Easing Regulations on Selective Credit Businesses Among the registered entities, the authorities will select credit businesses that have no records of violating regulations and are focused on lending to lower income groups to offer them an array of regulatory incentives with the aim of ultimately making more credit lending opportunities available to lower income groups. The incentives will include fundraising opportunities through banks, allowing their loan services to be put up on online loan brokerage platforms along with the mainstream loans and increasing the total asset threshold from the current tenfold of equity capital. III. Improving Efficiency in Consumer Protection through Tightened Supervision Regulatory supervision will be strengthened to close loopholes in consumer protection. For the registered entities, the authorities will seek to introduce new monetary sanctions in place of the current three-month suspension of business operation, prevent unfair lending contracts by strengthening supervision on loan agreements and newly create a registration qualification that requires credit businesses to maintain a minimum number of regular employees. Other mea
Mar 30, 2021
- FSC Announces Plans to Improve and Diversify Microfinance Services
- The FSC announced plans to expand and diversify microfinance opportunities for individuals with low credit backgrounds on March 30 as a follow-up to the announcement on the revised maximum legal lending rate that is scheduled to go into effect from July 7. Key Details I. Expanding Microfinance Opportunities - Temporarily provide KRW300 billion in alternative lending options for those who currently use loans with interest rates above the twenty percent threshold - Provide a two percent reduction in interest rates for Sunshine Loan 17and expand incentives for those paying back diligently - Increase the availability of Sunshine Loan Youth by KRW100 billion and temporarily provide KRW5 million in lump-sum payment to new users - Improve the employment-based microloan product for individuals with low credit standing and low income II. Introducing New Microfinance Opportunities - Expand the contribution base (which is currently limited to mutual finance and savings banks only) and establish a steady fundraising structure for microfinance services by opening up the scope of contributors to all financial sectors including banks, insurers, credit finance firms, etc. - Launch a new banking sector-based microloan product (Sunshine Loan Bank) which will help build a bridge to the mainstream finance sector through credit score improvements, etc. - Launch a new credit finance sector-based microloan product (Sunshine Loan Card) which will help improve convenience for those with low credit standing III. Improving Effectiveness of Microfinance - Strengthen connection between microfinance and welfare, employment and debt adjustment programs - Strengthen connection between microfinance and financial education, credit debt management consulting, etc. -Strengthen connection between microfinance and the automatic dormant account inquiry system, etc. * Please refer to the attached PDF for details.
Mar 17, 2021
- New Legislation on Financial Consumer Protection to Take Effect from March 25
- The FSC approved the supervisory regulation on financial consumer protection on March 17 as a necessary final step for the implementation of the newly enacted Financial Consumer Protection Act beginning on March 25, 2021. The implementation of the Financial Consumer Protection Act will (a) expand the application of the six major sales regulations to all financial products, (b) require financial institutions to set up internal control standards for consumer protection, (c) introduce punitive fines of up to KRW100 billion as well as tougher criminal penalties, (d) expand consumer rights for subscription withdrawal and cancellation of unfair and illegitimate contracts, and (e) strengthen measures for consumer remedies. Although the new law will go into effect from March 25, certain aspects of the measures that require more preparation, such as setting up internal control standards or system development, the application of new regulations will be deferred for six months. In the meantime, the authorities plan to hold a series of information sessions to make sure that both the consumers and financial businesses across different sectors are well informed about the specifics of the new law. The financial authorities will continue to provide support and work to ensure a smooth implementation of the new law on financial consumer protection. * Please refer to the attached PDF for details.
Mar 09, 2021
- Government Approves Revision Bill to Strengthen Investor Protection with PEFs
- The government approved a revision bill to the Enforcement Decree of the Financial Investment Services and Capital Markets Act during a cabinet meeting held on March 9 with an aim to strengthen investor protection in the private equity fund (PEF) market. The revision bill is a follow-up to the measures to improve the regulatory framework on private equity funds announced on April 27, 2020and is scheduled go into effect immediately after promulgation in mid-March. Key Provisions I. Close Loopholes to Prevent Evasion of Tougher Regulations Currently, the number of investors for a private equity fund is limited to up to forty-nine.When a feeder fund invests in a master fund and the amount of that investment makes up ten percent or more of the master fund, the number of investors from feeder fund is counted toward the number of investors of the master fund. Under the current scheme, when a number of feeder funds makes investments of less than ten percent each toward a master fund, the master fund can be operated as a PEFand not as a publicly traded fundeven when the actual number of investors exceeds the regulated threshold of less than fifty. To address this problem, the revised bill adds another provision to the current scheme, which requires that when a number of feeder funds from a single PEF management firm invests in a master fund and their total investment amount makes up thirty percent or more of the master fund, the number of investors in the feeder funds will be counted toward the total number of investors of the master fund. II. Strengthen Regulations on Unfair and Inappropriate Sales Activities Cross investing or circular investing between PEFs managed by the same entity exposes the problem of artificially inflating the volume of trust or the possibility of dual compensations. In addition, recent PEF mis-selling cases revealed coercive sales tactics in return for other monetary benefits, such as business investment or loan from the fund. The revision bill pr
Nov 26, 2020
- Deferment of Principal Payment for Vulnerable Debtors to be Available for Six More Months
- The FSC and other relevant institutions decided to make available the deferment of principal payment programs for vulnerable debtors for six more months until the end of June 2021 due to concerns about a protracted pandemic situation. (PRE-WORKOUT BY LENDING INSTITUTIONS) Credit loan and microloan users experiencing a diminished debt servicing capacity due to a drop in income amid COVID-19 may apply for a pre-workout program (deferment of principal payment) for six to twelve months at the originating lending institution until June 30, 2021.(DEBT ADJUSTMENT BY CCRS) The current deferment of principal payment (one-year maximum) offered by the Credit Counseling Recovery Service for those who have seen their income drop due to COVID-19 will be made available on a more regular basis from December 1, 2020. (INDIVIDUAL DEBT PURCHASE BY KAMCO) The Korea Asset Management Corporation (KAMCO)’s debt purchase program will help purchase unsecured debt accrued between February 1, 2020 and June 30, 2021. Both lending institutions and debtors may apply during this period.* Please refer to the attached PDF for details.
Oct 27, 2020
- FSC Introduces New Rules on Financial Consumer Protection
- The FSC introduced a proposal of an enforcement decree to provide details of the newly enacted legislation on financial consumer protection (“the Act” hereinafter), which is scheduled to go into effect on March 25, 2021.1 The proposal will be available for public notice and comment for forty days from October 28 until December 6.KEY MEASURES(SCOPE OF APPLICATION) The Act stipulates that financial products offered by banks, insurance companies, financial investment firms, specialized credit finance companies and savings banks will become subject to the new law. The proposal includes financial products offered by the Credit Union, P2P lending firms and registered private lenders.(ENTRY REQUIREMENT) The proposal establishes business registration requirements for both loan sales agents and independent advisory service providers. For both categories, online service providers are required to install an algorithmic program designed to prevent conflicts of interest for consumers.(INTERNAL CONTROL REQUIREMENT) In principle, all financial service providers are required to have internal control standards on financial consumer protection with the exception of small firms with less than five regular employees. Financial service providers should regularly improve their internal control standards if and when indicated by the regulators. The internal control standards should include the current best practice guidelines on financial consumer protection.2(SALES REGULATIONS) This proposal specifies rules improvements and introduces additional regulations that are necessary for the implementation of the six major sales regulatory principles under the Act.(CONSUMER RIGHTS) The Act introduces new safeguards by guaranteeing consumers the right to withdraw subscription and terminate unfair agreements, while delegating the scope of application through an enforcement decree. In this regard, the right to withdraw subscription applies to all loan and guarantee products in principle and the
Oct 19, 2020
- FSC Introduces Improvements to Credit Recovery Support Programs
- The FSC announced ways to improve the credit recovery support system on October 16. The improved measures are expected to go into effect in November this year.The FSC has been working to improve the personal debt adjustment program run by the Credit Counseling Recovery Service (CCRS) to help reduce excessive personal debt service burdens and support quick recovery. In this year, the government introduced loan deferment programs in March and April to help relieve debt burdens of vulnerable individuals hit by the COVID-19. In order to improve the credit recovery support system, the FSC prepared the following measures.a. CCRS’s up to one-year loan deferment program currently offered to those who have seen their income drop due to COVID-19 will be extended to include those who have been laid off and/or experienced business closure.b. The age limit for CCRS’s special debt adjustment program for the unemployed youth with overdue debts of three months or more will be increased from below 30 years old currently to 34 years old and below, while extending the deferment period from maximum four years to five years.c. Improvements will be introduced that will restrict creditor institutions from denying loan deferment on non-overdue loans or activate a trigger clause for events of default just because a debtor applies for a debt adjustment.d. Improvements will be made to allow creditor institutions to cancel account seizures upon debtors’ request when entering into a debt adjustment program.e. Special exemptions for vulnerable debtors will be applied to all basic income recipients and those with severe disabilities.f. The current six-month term restriction placed before a debtor can reapply for an individual workout will be shorten to three months to help with quick recovery.g. For the portion of the principal that has been repaid, the remission rate on interest will be increased from 80 percent to 90 percent to help reduce debt servicing burden of vulnerable debtors.h. Su
Oct 15, 2020
- Mobile Microloan Application to be Available for Young Adults
- The FSC announced the availability of mobile microloan application system for young adults starting from October 30. Both first-time and returning applicants will be able to use the mobile application system and submit applications online via a mobile app from the Korea Inclusive Finance Agency.The “sunshine loan for youth” program was launched in January this year to provide financing support to young adults who face difficulties in accessing traditional lending institutions. Since January, it has provided KRW135.2 billion in microloans to some 38,000 young adults.With the third supplementary budget, the fiscal resources allocated for the program has been expanded from KRW100 billion to KRW200 billion. In addition, special guarantees became available for the program from August 18, which raised the maximum lending cap per application from KRW3 million to KRW5 million.The “sunshine loan for youth” program with special guarantees will continue to be offered until the end of this year with the mobile application service being available from October 30.* Please refer to the attached PDF for details.
Sep 09, 2020
- FSC Discusses Details of Consumer Credit Bill
- The FSC held the 9th task force meeting on improving the personal debt management system on September 9, and unveiled key details of the Consumer Credit Bill, which include (i) promoting private sector driven debt adjustment process, (ii) mitigating excessive debt collection burdens and (iii) strengthening debtor protection measures. KEY PROVISIONSThe government’s proposal on Consumer Credit Bill will focus on establishing a delinquent debt management procedure and providing incentives to financial institutions to promote a virtuous cycle for both debtors and creditors.I. PROMOTE PRIVATE SECTOR DRIVEN DEBT ADJUSTMENT PROCESS► Provide delinquent debtors who face difficulties in repaying debts on their own the right to request debt adjustment from financial institutions► Require financial institutions to inform debtors of their right to request debt adjustment prior to taking steps toward debt collection while prohibiting financial institutions from pursuing debt collection upon such a request and having them offer a debt adjustment plan based on their own standards► Introduce debt adjustment mediation specializing businesses which will provide assistance to individual debtors during the debt adjustment processII. MITIGATE EXCESSIVE DEBT COLLECTION BURDENS► Prohibit overdue interest charge on the principal which has not yet reached maturity even in the events of default► Restrict interest hike on debts that are deemed uncollectable and transferred to a third party such as a debt collector and have creditor institutions to consider the possibility of debt recovery when drawing up and applying their own standards of extinctive prescription► Limit the number of debt collection calls while providing debtors with a right to request a restriction on debt collection calls and to file lawsuits for damageIII. STRENGTHEN DEBTOR PROTECTION MEASURES► Require original creditor institutions to evaluate how debt collection agencies treated debtors in the past and whe
Jun 25, 2020
- Personal Debt Purchase Program to Begin June 29
- Vice Chairman Sohn Byungdoo attended the launching of the Korea Asset Management Corporation’s personal debt purchase program on June 25 and spoke about the importance of inclusive finance.KAMCO, lending institutions and other relevant institutions signed a memorandum of agreement. Under the agreement, lending institutions may sell non-collateralized delinquent personal debt to KAMCO, which in turn will take over individual debt and help debtors with debt adjustment plans.KAMCO’s personal debt purchase program begins on June 29 for the initial duration of one year with the possibility of extending thereafter.The following is a summary of Vice Chairman Sohn’s remarks.With the government’s KRW175 trillion-plus financial support programs have helped to ease problems of market instability and liquidity shortage. However, widening income gap in the society needs to be closely watched. Job losses and business closures have created extra burdens for many individuals, while asset prices are also showing signs of instability in the property and stock markets. The delinquency rate in household debt has not increased, but the rising trend in household debt needs to be watched carefully.The agreement signed by KAMCO and financial institutions today is aimed at providing assistance to the most vulnerable debtors. The government introduced on April 29 a deferment of loan repayment program for individual debtors who are incapable of servicing debt due to the pandemic-related reasons. For delinquent debtors, KAMCO will take over individual debt from lending institutions and help with debt adjustment. To help establish a more appropriate relationship between lending institutions and debtors, the government will work on introducing a bill aimed at protecting debtors’ rights and preventing excessive debt collection methods.* Please refer to the attached PDF for details.
Apr 27, 2020
- Deferment of Principal Payment Available for Vulnerable Debtors
- The FSC announced on April 27 that deferment of principal payment will be available for vulnerable debtors who are unable to service debts due to diminished income caused by the COVID-19 pandemic. It will be offered by all financial institutions from April 29 until the end of this year.PROGRAMSBased on the situation of individual debtors, either a pre-workout program or a debt adjustment program is available.(PRE-WORKOUT BY FINANCIAL INSTITUTIONS) Microfinance loan users should apply for deferment of principal payment from the original lending institutions. Debtors without multiple debts are also able to apply at the lending institutions.Individual debtors whose diminished income minus living expenses is lower than monthly debt payment can apply for a deferment of principal payment for six to twelve months with no extra fees.(DEBT ADJUSTMENT BY CREDIT COUNSELING RECOVERY SERVICE) Debtors with multiple debts can apply for deferment of principal payment through a debt adjustment program at the Credit Counseling Recovery Service.Individual debtors with multiple debts whose net property value is less than the amoun ot total debts can apply for a deferment of principal payment for six to twelve months. Long-term debtors with three or more months of overdue payments may also be eligible for a debt relief program which offers 10~70 percent of debt cancellation.* Please refer to the attached PDF for details.
Apr 08, 2020
- Strengthening Support for Vulnerable Debtors
- The government unveiled its plans to strengthen support for vulnerable debtors at the 4th Crisis Management Meeting held on April 8. The government will help set up a KRW2 trillion new facility at the Korea Asset Management Corporation, which will be used to purchase overdue debts and help alleviate debt burdens of vulnerable debtors.BACKGROUNDThe prolonging economic slowdown caused by the COVID-19 has led to unpaid leaves and loss of work opportunities for many individuals, which may contribute to an increasing number of cases where individuals are unable to service their debts. Against this backdrop, the government introduced the plans to help prevent vulnerable debtors from turning into delinquent debtors by expanding the eligibility of pre-workout programs by individual financial institutions, strengthening the debt adjustment support provided at the Credit Counseling Recovery Service and establishing a new facility for purchasing overdue personal debts.KEY MEASURESI. PRE-WORKOUT PROGRAM FOR DEBTORS WITHOUT MULTIPLE DEBTSFrom the end of April, vulnerable debtors whose income levels have fallen due to COVID-19, that have difficulties servicing household debts and are facing a risk of debt overdue may use pre-workout programs offered by individual financial institutions. A 6- to 12-month deferment of principal payment will be provided by all financial institutions until the end of this year. The pre-workout programs may be extended thereafter if deemed necessary.II. DEBT ADJUSTMENT PROGRAM FOR DEBTORS WITH MULTIPLE DEBTSFrom the end of April, multiple-debt holders whose income levels have fallen due to COVID-19, that have difficulties servicing debts and are facing a risk of debt overdue may use debt adjustment programs offered by the Credit Counseling Recovery Service. The CCRS’ debt adjustment programs offer up to one year of deferment of principal payment for at-risk debtors (including short-term debtors of less than three months) as well as debt reduction fo
Mar 26, 2020
- Government Expands Young Adult Loan for Rent Payments to Boost Financial Inclusiveness
- The FSC announced on March 26 an increase of KRW3 trillion for the young adult loan for rent payments from the previously available amount of KRW1.1 trillion to KRW4.1 trillion.The young adult loan for rent payments was launched on May 27, 2019 through an agreement between the FSC, the Korea Housing Finance Corporation and the Korea Federation of Banks with an initial goal of providing KRW1.1 trillion in loans for young adults. During a 10-month period until March 20 this year, about 25,000 young adults have benefited from low-rate loans for rent payments with the total amount of loans issued standing at KRW1.2 trillion. About 25 percent of the young adults using the loan were found to be students or job seekers without regular incomes. The loan program has had an impact in resolving housing problems of many young adults.With the increased amount of loans available for up to KRW4.1 trillion, about 60,000 more young adults are expected to benefit from the program.The FSC will continue to work for expanding the online application channels in order to improve accessibility for young adults.* Please refer to the attached PDF for details.
Mar 11, 2020
- Loan Deferment Available for Financially Vulnerable Individuals
- The FSC announced on March 11, 2020 loan deferment programs for six months for the financially vulnerable individuals affected by the COVID-19 outbreak.The programs are intended to support debtors who either have entered into a debt adjustment agreement or are recipients of microfinance policy loans and have qualified for a diminished income level due to the COVID-19 outbreak.During the grace period, extra penalties such as a downgrade in credit rating will not be imposed for the failure to make debt payments.For small merchants in traditional markets, the government will make available KRW5 billion in additional funds (up to KRW10 million for each merchant) through a microfinance scheme.* Please refer to the attached PDF for details.
Dec 16, 2019
- FSC Unveils Revised Guidelines for Financial Consumer Protection
- The FSC unveiled a revision to the Guidelines on Financial Consumer Protection on December 16 in order to continue to encourage financial institutions to take more responsibility in consumer protection prior to the enactment of the Financial Consumer Protection Act by the National Assembly. The revised guidelines, which will go into effect on January 1, 2020, contain measures to enhance consumer protection function of financial institutions.KEY MEASURESI. ENCOURAGE CHIEF EXECUTIVES TO LEAD CONSUMER PROTECTION EFFORTS► Within financial companies, the position of chairperson of financial consumer protection council will be assumed by company’s chief executive officer (CEO) in order to boost the status of financial consumer protection council. The government will recognize an exemption to this rule and allow chief consumer officer (CCO) to assume the role of chairperson provided that the company has received an above ‘satisfactory’ rating on its consumer protection record.► In order to promote a comprehensive consumer issue management system in financial companies, the role and authority of financial consumer protection council will be boosted. When launching new products, the council has the authority to conduct impact analysis on consumers, review results of advertisement compliance assessment by relevant authorities and examine new or revised product information.► Financial institutions will be encouraged to hire a sufficient level of consumer protection specialists while coordinating with relevant departments, such as customer relations, product development and sales.II. GRANT MORE INDEPENDENCE AND AUTHORITY FOR CHIEF CONSUMER OFFICERS► Financial companies managing large amounts of assets and have a high frequency of consumer complaints reported within a particular region should appoint an independent chief consumer officer (CCO) among its board members.► CCOs should be given sufficient authority to oversee issues concerning consumer protection. By
Nov 28, 2019
- Revision Bill on Credit Information Act Moves Ahead at National Assembly
- The National Policy Committee of the National Assembly approved a revision bill on the Credit Information Use and Protection Act on November 28. Along with the Personal Information Protection Act and the Act on Promotion of Information and Communications Network Utilization and Information Protection, this revision bill on the Credit Information Act is considered as a key legislation to promote data economy.KEY FEATURES► ESTABLISHING NEW LEGAL BASIS FOR USING AND ANALYZING BIG DATA- Pseudonymised information may be used without consent from the owner of the information for statistical, industry research and public documentation purposes.- Converging data is permitted only by the institutions designated by the government.- Safety measures are established for the use and convergence of pseudonymised data, including a prohibition on re-identification of pseudonymised data and a requirement for separate management of additional information. ► STRENGTHENING THE ROLE OF PERSONAL INFORMATION PROTECTION COMMISSION- The revision bill on the Personal Information Protection Act upgrades the status of the Personal Information Protection Commission (PIPC) from an administrative commission to that of a central administrative agency with authority to conduct investigations, regulate commercial enterprises and implement relevant laws.► IMPROVING REGULATORY FRAMEWORK ON CREDIT BUREAU INDUSTRY- The credit bureau industry will be categorized into a) personal CB, b) individual business CB and c) corporate CB, while the entry barrier for credit bureau businesses will be lowered. - The current regulation which restricts credit bureau businesses from performing for-profit operations will be lifted, and credit bureau businesses will be allowed to conduct data analysis and processing as well as consulting.- Conduct regulations will be established to improve the soundness of the credit bureau industry. Largest shareholders of personal CB and individual business CB businesses will be su