Financial Supervisory Service to Prevent Illegal Debt Collection on Claims Beyond Statute of Limitations

Implementation of Level 3 Management Measures

The Financial Supervisory Service (FSS) has ordered the debt collection industry to implement a '3-step management system' to prevent illegal debt collection on claims whose statute of limitations has expired. The FSS announced on the 26th that it discussed this measure at the 'CEO Meeting for Improving Business Practices in the Debt Collection Industry.'

There are cases where debt collectors illegally pursue debts without properly informing debtors about the expiration of the statute of limitations. This is done with the intention that even after the statute of limitations has expired, if the debtor makes a partial payment of a small amount or signs a document promising repayment, debt collection can be restarted.

To prevent such cases, the FSS and the debt collection industry have agreed to implement a 3-step management system. The first step requires that when accepting claims with expired statutes of limitations, these must be separately registered in the debt management system. The second step mandates that when notifying the debtor of the acceptance, information about the statute of limitations period, requests for related documents, and the debtor’s rights to request suspension of collection must be communicated. The third step involves controlling illegal debt collection activities related to claims with expired statutes of limitations through the debt management system.

The FSS also introduced measures against violations by the debt collection industry, such as accepting claims that should not be accepted. It requested branch managers and other supervisors to check whether unauthorized claims have been accepted.

The FSS stated, "We plan to closely monitor the implementation status of improvement measures by the debt collection industry and focus on inspecting the internal control operations of managers and others."

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