'Rental Up' Added to Female Warrior Asset Securitization... Financial Services Commission to Implement May Revision

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 promote a plan 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@

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The Financial Services Commission (FSC) will establish and implement a basis for specialized credit finance companies to securitize rental assets to raise funds. Additionally, it will revise the sales amount criteria for credit card 가맹점 (merchants) that had caused confusion by business site, and change the service terms modification by international brand companies to a post-reporting system.

On the 29th, the FSC announced changes to the 'Specialized Credit Finance Business Supervision Regulations,' including additional funding methods for specialized credit finance companies, revisions to the sales amount criteria for credit card 가맹점, and exceptions to prior notification requirements for service terms changes provided by international brand companies.

Through this regulatory change, the FSC added "rental business" as an ancillary business that allows the issuance of securities based on receivables held by specialized credit finance companies. This measure, scheduled to take effect in May, aims to expand the funding methods of specialized credit finance companies and facilitate liquidity. Under the current Specialized Credit Finance Business Act and its enforcement decree, specialized credit finance companies can only issue securities based on receivables related to their core businesses such as installment sales and leases.

The proposed amendment to the supervision regulations defines the rental business as an ancillary business eligible for issuing securities based on receivables held by specialized credit finance companies, thereby permitting asset securitization of rental assets. However, even in this case, securitized rental assets will be included within the existing rental business handling limits to prevent excessive handling of rental business.

The sales amount calculation criteria for credit card 가맹점 will also be revised. Currently, the Specialized Credit Finance Business Supervision Regulations set criteria for small and medium-sized credit card 가맹점 with annual sales between 300 million and 3 billion KRW. The sales amount calculation bases include the taxable standard under the Value-Added Tax Act (for VAT taxable businesses), income amount under the Income Tax Act (for VAT-exempt individual businesses), and credit card sales amount (when taxable data is unavailable).

Going forward, the FSC plans to clarify the taxable data basis according to the characteristics of each 가맹점 or specify alternative data when taxable data is unavailable, thereby improving the consistency of sales amount calculations.

For corporate businesses, the current regulation only defines sales amount as "sales generated during the previous fiscal year" for corporations exempt from VAT. Since the taxable data basis was not clearly defined, the FSC plans to explicitly define the sales amount basis for corporate businesses as the income amount reported in the corporate tax return, which includes both taxable and exempt income under the Value-Added Tax Act, representing total income generated from the business.

Additionally, while general credit card 가맹점 can substitute credit card sales amount when taxable data is unavailable, sub-businesses of payment gateway (PG) companies are not direct 가맹점 of card companies and thus lack such data. Therefore, for sub-businesses of PGs, even when taxable data is unavailable, the FSC will allow the use of sales or payment agency/intermediation details reported by PGs to the National Tax Service under the Value-Added Tax Act.

For businesses that have registered but delayed business commencement and reported a taxable standard of zero for the relevant period, grounds will be established to calculate sales amount using substitute data such as credit card sales amount, similar to cases without taxable data. Furthermore, general (corporate) taxi operators, previously excluded from the selection of small and medium-sized credit card 가맹점, will be added to the selection target and receive preferential fee rates based on sales amount, similar to individual taxi operators.

Changes to service terms provided by international brand companies will also be exempted from prior notification and changed to post-reporting. Until now, domestic card companies could not intervene in changes to services provided by international brand companies but were still subject to prior notification requirements, causing delays in informing financial consumers about service changes.

The FSC plans to designate changes to service terms provided by international brand companies as post-reporting to enhance convenience for financial consumers through more prompt notifications. Shin Jang-su, Director of the FSC's Small Finance Division, explained, "The amendment to the Specialized Credit Finance Business Supervision Regulations will be announced for public comment until May 9, and related procedures will be promptly undertaken."

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