Financial Supervisory Service: "Ultra-High Interest Loans Over 60% Annually Are Invalid"... Issuance of Certificate Confirming Nullification of Principal and Interest

Victims Can Use as Evidence in Lawsuits for Recovery of Unjust Enrichment
Certificate Serves as Grounds to Request Cessation of Illegal Collection Activities

The Financial Supervisory Service announced on March 5 that it will issue a "Certificate of Nullification" under the name of the Governor of the Financial Supervisory Service for anti-social lending contracts, such as ultra-high interest loan agreements exceeding an annual rate of 60%, upon application by victims of illegal private lending. The amended Lending Business Act, which took effect in July 2025, defines anti-social lending contracts—including ultra-high interest loan agreements with annual rates exceeding 60%—as contracts for which principal and interest may be nullified.

Victims can apply for the issuance of the Certificate of Nullification via the Financial Supervisory Service website (online) or through the Credit Counseling & Recovery Service (Integrated Support Center for Microfinance). When applying, they must submit specific documentation, including details of the damage suffered, information about the lending contract, and transaction records with the illegal lender.

The Financial Supervisory Service reviews the validity of the evidence submitted by the victim, including the contract date (on or after July 22, 2025), the annual interest rate (exceeding 60%), and loan or repayment amounts, based on the contract details. In principle, the Certificate of Nullification is sent to the illegal lender (creditor) via their phone number or messenger (such as KakaoTalk or LINE). If requested by the victim, it can also be sent to the victim.

Victims can use the Certificate of Nullification as reference material in lawsuits to confirm the nullification of anti-social lending contracts or to claim the return of unjust enrichment. It may also serve as supporting evidence when requesting the illegal lender to cease unlawful collection activities. The Financial Supervisory Service stated, "We will continue to strengthen our monitoring of illegal private lending activities and work closely with related agencies to do our utmost to prevent and redress damages from illegal private lending."

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