Loan brokerage fee reduced by 1%P... Easing funding regulations with 'Premier League'

Strengthening Supervision of Private Lending... Continuous Improvement of Consumer Protection Blind Spots
Ongoing Efforts to Eradicate Illegal Private Financing Measures

[Asia Economy Reporter Kwangho Lee] Financial authorities will lower the upper limit of loan brokerage fees charged when introducing borrowers to lending companies by 1 percentage point. They will also continue to implement measures to eradicate illegal private loans, such as selecting excellent microfinance lenders and easing loan regulations.

On the 31st, the Financial Services Commission announced follow-up measures to the July 7 reduction of the statutory maximum interest rate (from 24% to 20%) titled "Measures to Promote the Supply of Microloans and Consumer Protection through Improvement of the Loan Business System."

First, by lowering loan brokerage fees, they will support cost reduction in the low-credit, high-interest lending sector. To this end, the current upper limit on loan brokerage fees, which is 4% for loans up to 5 million KRW (and 3% for amounts exceeding that), will be reduced by 1 percentage point to encourage actual fee reductions in the market.

Additionally, by selecting excellent microfinance lenders, some regulations will be rationalized, including funding from banks, use of online loan brokerage platforms, and easing of loan restrictions.

Previously, financial authorities announced plans to introduce a Loan Business Premier League. The Loan Business Premier League provides multifaceted benefits such as eased funding, operational regulations, and sanctions for large lending companies with assets exceeding 10 billion KRW that have never been sanctioned by the Financial Supervisory Service or other authorities. Currently, lending companies procure funds at rates of 5-6% through secondary financial institutions like savings banks and capital companies, but borrowing from primary financial institutions such as banks can lower funding costs.

Furthermore, to enhance the effectiveness of loan business sanctions, a "penalty substitute for business suspension" will be introduced, new personnel requirements will be established upon registration, re-entry restrictions after business closure will be expanded (from 1 year to 3 years), and contract supervision will be strengthened (including reporting obligations upon drafting or revising contracts). These measures aim to strengthen entry and supervision of loan businesses and continuously address consumer protection blind spots.

Measures to eradicate illegal private loans will also be continuously pursued. Nationwide crackdowns will be intensified through a government-wide task force (TF), and free support for debtor representatives and litigation lawyers will be expanded and strengthened.

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