If SMEs or Low-Credit Borrowers Sell Funds or Trusts Within a Month After Loan, It Is Considered 'Kkeokgi'

[Asia Economy Reporter Kim Hyo-jin] A plan is being promoted to regulate financial institutions that sell financial products such as funds or money trusts within one month after lending money to customers, considering it as 'kkeokgi' (tying sales).

The Financial Services Commission announced on the 23rd that it has prepared a draft supervisory regulation on financial consumer protection including this content. From the 24th, opinions from stakeholders will be collected for 40 days.

'Kkeokgi' refers to an unfair practice where loans are given to borrowers with low bargaining power, such as small and medium-sized enterprises or low-credit individuals, while forcing them to subscribe to other financial products, effectively increasing the loan interest rate.

The Financial Consumer Protection Act, set to be enforced in March next year, includes a provision prohibiting the act of forcing consumers to enter into contracts for other financial products in relation to loan-type product contracts across all financial sectors.

Accordingly, the FSC is preparing detailed matters such as the sales restriction period and financial products through enforcement ordinances and supervisory regulations.

The draft prohibits the sale of insurance-type financial products or certain investment-type financial products such as funds and money trusts to small and medium-sized enterprises, vulnerable individual borrowers with credit ratings of 7 or lower, and wards under adult guardianship or limited guardianship within one month before and after the loan.

Deposit-type financial products cannot be sold if the monthly payment amount exceeds 1% of the loan amount.

For other general borrowers, insurance-type and some investment-type financial products can be sold as long as the monthly payment amount does not exceed 1% of the loan amount, and deposit-type products are not separately regulated.

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