P2P Industry Moves to Establish Regulations and Best Practices for Sound Business Conduct

Illustration by Youngwoo Lee 20wo@

[Asia Economy Reporter Kim Min-young] Peer-to-peer (P2P) financial companies, which will be incorporated into the formal financial system this October, have begun establishing industry regulations and standards.

The Online Investment-Linked Finance Association Establishment Task Force announced on the 19th that it will officially commence work on creating industry regulations and standards. This comes five months after the Korea P2P Finance Association and the Marketplace Finance Council jointly initiated efforts last October to form a single statutory association.

They are preparing the "Regulations on the Business and Operations of Online Investment Operators" along with detailed standard terms and conditions segmented by product type and contract target to establish clear criteria for sound business practices and contracts. To institutionalize compliance management and prevent illegal business activities, they plan to develop a "Compliance Manual" and "Standard Internal Control Criteria." Additionally, to minimize information asymmetry in the market and enhance industry transparency, the "Product and Management Standard Disclosure Criteria" will be significantly strengthened.

To protect investors, a dedicated department will be established to oversee verification and inspection tasks related to the mandatory "Deposit Management and Deduction Enrollment." To increase the reliability of credit screening and minimize non-performing loans, they will establish "Model Guidelines for Risk Management," "Model Guidelines for Loan Interest Rate Calculation," and "Model Guidelines for Preventing Financial Accidents," while also strengthening guidance for member companies. Clear standards will be set for advertising review and regulation to protect loan users, with strict sanctions imposed in case of violations.

Furthermore, an independent self-regulatory review committee will be formed and operated to deliberate and decide on sanctions if member companies fail to meet these standards.

The task force has formed a "Self-Regulatory System Establishment Task Force (TF)" composed of dedicated professionals and legal officers from major companies within the task force to enhance industry soundness and strengthen practical investor and user protection measures. The goal is to complete the establishment of the self-regulatory system by June, before the registration process for online investment operators begins.

This content was produced with the assistance of AI translation services.