Financial Services Commission Supports 'P2P' Facing Investment Challenges Due to Interest Rate Hikes

On the 23rd, 'Field Meeting for the Healthy Development of the P2P Industry' Held

[Asia Economy Reporter Sim Nayoung] Recently, P2P (online investment-linked finance) companies facing difficulties such as attracting investment funds due to rising interest rates have proposed institutional improvement measures to the Financial Services Commission to promote investment in P2P by financial institutions.

On the 23rd, the Financial Services Commission held an 'On-site Meeting for the Sound Development of the P2P Industry' to review business status and the financial environment with related organizations and major P2P companies, and to listen to difficulties experienced on-site and suggestions for related institutional improvements.

This meeting was organized at the two-year mark since the enforcement of the P2P Act (Online Investment-Linked Finance Act) to diagnose the current situation faced by the P2P industry and discuss future directions for the sound development of the P2P industry. Kwon Daeyoung, Standing Commissioner of the Financial Services Commission, stated, "In difficult economic and financial environments like these days, P2P loans supplying mid-interest rate loans for middle- and low-credit households and small and medium-sized enterprises are important."

As of the 23rd, there are 49 registered companies meeting the requirements under the OnTu Act. Although the industry has rapidly grown centered on mid- and low-interest loans and investment markets through innovative credit evaluation methods, it has recently shown signs of growth stagnation. The financial authorities judge that support is needed so that the P2P industry's leap forward can serve as a stepping stone to overcome funding difficulties for middle- and low-credit households and small and medium-sized enterprises who find it difficult to use existing financial companies.

The companies attending this meeting stated, "In the case of personal credit loans supported by P2P so far, more than 70% of borrowers were below grade 4 of the old credit rating (based on CB companies), supplying mid-interest rate loans with an average interest rate of 10-15%, but due to the continued difficulties in the global economic and financial conditions, loan volumes have shrunk and profitability has deteriorated, so improvement of business conditions is necessary."

They especially said, "The biggest problem is the lack of loan capacity compared to P2P loan demand because new funds are not flowing in due to difficulties in fundraising, so it is necessary to create a breakthrough for the P2P industry by activating investment not only from individual investors but also from financial institutions." Accordingly, they requested support from financial authorities regarding difficulties arising in the actual investment execution process, although investment in P2P by financial institutions is permitted under the current OnTu Act.

They also proposed institutional improvement measures to improve business conditions, such as allowing advertising through external platforms and reducing fees for central record management institutions.

The financial authorities plan to discuss these proposals at the 5th Financial Regulatory Innovation Meeting in December and, if necessary, prepare and promote measures to resolve difficulties through active official interpretations and designation of innovative financial services.

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