Starting Next May, You Can Switch to More Favorable Loans Online

[Asia Economy Reporter Song Hwajeong] Starting from May next year, consumers who have taken out loans from banks, savings banks, card companies, and capital companies will be able to switch to products with more favorable conditions online.

On the 14th, the Financial Services Commission announced that it will establish an online refinancing loan transfer system among financial companies to support the reduction of interest burdens for financial consumers.

Accordingly, a system will be established to mediate and computerize the repayment procedures (repayment request, provision of necessary information, final repayment confirmation) among financial companies through the Financial Settlement Service network. Consumers who have taken out loans from banks, savings banks, card companies, and capital companies will be able to easily switch to products with better conditions through this system. The loan sectors such as private lenders, which do not use the Financial Settlement Service network and have different credit screening methods, and the insurance sector with insignificant related loan volumes, are excluded.

A Financial Services Commission official said, "Currently, the refinancing loan market has low participation due to the inconvenience for loan applicants and insufficient infrastructure," adding, "All procedures for refinancing loans will be conducted online and in a one-stop manner, reducing time and costs for consumers and financial companies, and increasing participation in the refinancing loan market."

The Financial Services Commission plans to expand participants in the refinancing loan market, such as loan comparison platforms, and provide sufficient loan information needed by financial consumers. In addition to current fintech companies, financial companies will also be allowed to operate loan comparison platforms to expand consumer choice. Financial companies will be able to operate loan comparison platforms as concurrent businesses by consulting on the operation direction, including verification of comparison and recommendation systems. Besides loan comparison platforms, the loan transfer system will also be accessible through existing individual financial company counters (apps). Financial consumers will be able to check accurate existing loan information necessary for decision-making in advance at the loan comparison stage (platform).

The Financial Services Commission has also prepared consumer protection measures. First, it will strengthen verification of the platform's comparison and recommendation algorithms to prevent conflicts of interest with consumers, such as preferential recommendation of a financial company's own products. Along with this, a pilot operation period will be introduced to manage financial market risks such as accelerated money movement that may occur when refinancing loans are activated. The Financial Services Commission plans to review system usage during the pilot operation and adjust operational plans considering the results and trends in discussions on international standards related to platforms.

Differences in loan regulations among financial sectors will also be rationally adjusted. Regulatory rationalization will be pursued to enhance fairness among sectors, focusing on regulations in the secondary financial sector.

The Financial Services Commission plans to form a task force (TF) involving stakeholders (financial sectors, fintech, Financial Settlement Service, etc.) within this month to coordinate detailed opinions and start building the loan transfer system within this year.

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