Threshold for Entering Credit Information Business Lowered... Obligation for Financial Companies' Investment Abolished
Amendment to Credit Information Act Passed at Cabinet Meeting
Periodic Verification of Corporate Credit Rating Models to Improve Quality
The obligation for financial companies to invest in corporate credit rating providers will be abolished, and corporate credit evaluation models will be periodically verified to improve the quality of evaluation models.
On the 17th, the Financial Services Commission announced that the partial amendment bill of the "Act on the Use and Protection of Credit Information" (Credit Information Act) containing these details was approved at the Cabinet meeting.
This amendment rationalizes entry regulations for corporate credit rating providers, periodically verifies the appropriateness of corporate credit evaluation models to enhance the quality of evaluation models, upgrades the basis for the preliminary licensing system for credit information businesses from supervisory regulations to legal provisions, and includes other institutional improvements related to credit information businesses.
First, the obligation for financial companies to invest in corporate credit rating providers will be abolished. Until now, corporate credit rating providers could only apply for permission if they were "corporations with more than 50% investment by financial companies," but considering the need to activate new entries by operators holding diverse corporate data, stock companies established under the Commercial Act will also be allowed to operate corporate credit rating businesses.
Corporate credit evaluation models will be included in the verification targets of the Credit Evaluation System Verification Committee to periodically verify their appropriateness and improve the quality of evaluation models. For personal and individual business credit evaluation models, periodic verification of the appropriateness of evaluation models is conducted by the "Credit Evaluation System Verification Committee" organized by the Korea Credit Information Services. However, corporate credit evaluation models currently lack such separate external verification mechanisms. With this amendment, corporate credit evaluation models will also undergo periodic verification by the Credit Evaluation System Verification Committee to promote the improvement of evaluation model quality.
Additionally, the basis for the preliminary licensing system, currently operated under the Credit Information Business Supervisory Regulations (notice), will be elevated to a legal provision. The amendment also includes a provision to adjust the refund surcharge rate applied when fines are refunded to be linked to market interest rates, making it more realistic.
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The amendment bill, which passed the Cabinet meeting on this day, is scheduled to be submitted to the National Assembly in December, and will be enforced six months after promulgation upon approval by the National Assembly. The Financial Services Commission plans to closely cooperate with the National Assembly to ensure that the bill is promptly approved during the legislative process.
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