"Biannual Disclosure of Interest Rate Reduction Request Acceptance Rate... Strengthened Guidance on Reasons for Rejection"

Disclosure of Improvement Measures for the Interest Rate Reduction Request System

[Asia Economy Reporter Kim Jin-ho] To activate the right to request interest rate reductions, each financial institution's acceptance rate will be disclosed semiannually. In addition, consumer guidance and promotion will be strengthened, and application criteria and review procedures will be made clearer. The aim is to help consumers utilize the right to request interest rate reductions more actively.

On the 31st, the Financial Services Commission announced the "Improvement Plan for the Interest Rate Reduction Request System" based on these points. Previously, in 2019, the government and the National Assembly legislated the right for consumers to request interest rate reductions from financial institutions if their credit status improved. Although the number of accepted requests for interest rate reductions has increased significantly, the acceptance rate for non-face-to-face applications has been much lower, causing the overall acceptance rate to decline, which has been identified as a problem.

Accordingly, the Financial Services Commission decided to improve the system so that financial consumers can properly utilize the right to request interest rate reductions. First, a unified standard for calculating statistics related to the right to request interest rate reductions will be established, and financial institutions will be required to disclose performance data semiannually. This includes the number of applications, number of acceptances, acceptance rate, and amount of interest reduction. In particular, through sharing best practices and designating record-keeping items, the financial industry's management system for the interest rate reduction request system will also be improved.

Consumer guidance and promotion will also be strengthened. To prevent consumers from misunderstanding that they cannot exercise their rights, the scope of loan products and precautions will be accurately stated and guided. The composition of product explanation documents will be improved so that consumers can clearly recognize related matters.

Furthermore, borrowers eligible for the right to request interest rate reductions will be regularly informed twice a year during the loan period via text messages, emails, or postal mail about key matters. Additionally, in collaboration with the financial industry, an annual "Intensive Promotion Week" will be operated.

Application criteria and review procedures will also be improved. A "standard common application requirement" will be prepared for the financial sector, broadly categorizing reasons for requesting interest rate reductions into income/property increase, credit rating improvement, and other items. When a request for an interest rate reduction is rejected, a "standard notification form" will be prepared by rejection reason type so that borrowers can easily understand the reasons for rejection.

The Financial Services Commission plans to swiftly complete most of the detailed measures from this year through the first half of next year in cooperation with financial associations. In particular, tasks such as strengthening consumer guidance and promotion and standardizing application and review criteria will be implemented starting from the first quarter of next year.

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