Financial Services Commission Provides 'Free Lawyer Support' to Low-Income Victims of Illegal Debt Collection

3,249 Cases of Illegal Lending and Illegal Debt Collection Support Last Year
Applications Possible Without Proof When Damage Confirmed
6-Month Proxy Period for Debtors, Extendable in First Term

On the 9th, officials were busy moving in the corridor of the Financial Services Commission at the Government Seoul Office in Jongno-gu, Seoul, where financial authorities decided to include mortgage loans (Judaemae) in the 'debt refinancing' infrastructure scheduled to be launched in May by the end of the year. Financial authorities explained that they aim to reduce the interest burden on mortgage loans by establishing a debt refinancing platform that allows users to compare financial sector loan interest rates at a glance and switch loans easily. Photo by Dongju Yoon doso7@

The financial authorities are set to fully implement the free debtor representative support program. Since its introduction in 2020, the debtor representative program has provided free legal services for 3,000 to 4,000 cases annually in response to illegal lending and illegal debt collection.

On the 31st, the Financial Services Commission announced that it has secured the largest budget since the program's inception for 2024 and will improve and implement the debtor representative system so that low-income and vulnerable groups suffering from illegal debt collection can more easily and conveniently receive free legal services.

According to a survey conducted by the Financial Services Commission at the end of last year targeting users of the debtor representative program to identify the actual conditions of illegal private financing and prepare improvement measures, 75% of users responded that "the debtor representative program was helpful," with 54.4% citing "being able to learn how to respond to illegal private financing damage" as the reason.

Based on the survey and field opinions, the government plans to make it easier and more convenient for victims of illegal private financing to use debtor representative services. First, during consultations at the Financial Supervisory Service’s Illegal Private Financing Reporting Center, if facts or concerns about illegal lending or illegal debt collection are confirmed, applicants will be able to receive debtor representative services without submitting separate proof documents. This will reduce the burden on applicants to prepare evidence of damage and is expected to enable timely legal service support.

The convenience of applying for debtor representative services will also be enhanced. The Korea Inclusive Finance Agency plans to send a link to the ‘Debtor Representative Application Dedicated Page (Financial Supervisory Service)’ via AlimTalk or text message to loan counselors if illegal private financing damage (or concerns) is identified during loan consultations. Additionally, the financial authorities will coordinate with related agencies to allow applications for debtor representative services through the ‘Legal Aid Platform’ currently being developed by the Ministry of Justice and the Korea Legal Aid Corporation.

Cases where debtor representative services were applied for but not received, or where support for appointing a debtor representative was provided once but damage continues, will be actively analyzed and identified for support. The debtor representative period is six months, with the possibility of a one-time extension.

The litigation representation program for damage recovery, such as compensation lawsuits for monetary damages suffered by victims of illegal private financing, will also be revitalized. To ensure that users of debtor representatives not only escape illegal debt collection but also receive compensation for financial losses, the program will strengthen guidance on litigation representation for debtor representative users and actively introduce the litigation representation program to victims during the investigation phase of illegal private financing by judicial authorities, enhancing cooperation with related agencies to provide relief.

Furthermore, to prevent situations where victims cannot use this service due to budget shortages or other reasons, the financial authorities plan to regularly monitor and analyze the usage status of debtor representatives. Kim Jin-hong, Director of the Financial Consumer Bureau at the Financial Services Commission, stated, “We will closely and meticulously oversee to protect more victims from increasingly ruthless illegal private financing,” and urged financial consumers to exercise special caution ahead of the Lunar New Year holiday, when demand for funds significantly increases and financial crimes threatening low-income people, such as illegal private financing and voice phishing, are likely to rise.

Meanwhile, through the ‘Government-wide Task Force (TF) for Eradicating Illegal Private Financing,’ the financial authorities will actively support investigations and crackdowns on illegal private financing while preparing and implementing multifaceted policies to eradicate illegal private financing, including expanding supply of inclusive finance, blocking access to illegal private financing, preventing illegal and excessive debt collection, and providing victim relief.

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