FSS Urges Private Lenders and Debt Collectors to Strengthen Security: "Strict Sanctions for Information Leaks"

On April 15, the Financial Supervisory Service held a briefing session for practitioners in the private lending and debt collection sectors, urging them to prevent the recurrence of illegal activities and to strengthen information security.

Flyers related to private loans are placed at closed stores in Myeongdong, Seoul. Photo by Jin-Hyung Kang aymsdream@

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The Financial Supervisory Service also stressed the importance of addressing recent hacking incidents in the private lending sector. The agency called for self-inspection and improvement of vulnerabilities in personal credit information security measures to prevent similar incidents from happening again. They emphasized that, in the event of customer information leaks, severe sanctions will be imposed.

Kim Hyungwon, Deputy Governor of the Financial Supervisory Service, urged the establishment of sound business practices and law-abiding awareness, as well as the enhancement of protection for individual debtors' rights.

In particular, he called for improvements to the indiscriminate practice of extending the statute of limitations, to prevent vulnerable borrowers with significantly insufficient repayment capacity from suffering unfair harm. He also demanded changes to business practices such as repeated sales of overdue debt and excessive debt collection.

The agency urged the private lending sector to refrain from targeting active-duty soldiers. This warning comes as more active-duty soldiers are taking out loans from private lenders for online gambling or investments in cryptocurrencies and stocks, and subsequently applying for debt adjustment programs.

Deputy Governor Kim diagnosed that recent incidents of personal credit information leaks at some private lenders stemmed from insufficient security measures, such as lack of network separation, failure to establish intrusion prevention systems, and inadequate encryption of personal credit information.

He requested that, in order to prevent the recurrence of hacking incidents, companies should conduct self-inspections to ensure compliance with security measures required by the Credit Information Act and promptly address any vulnerabilities found.

He also called on the private lending sector to actively participate in the New Leap Fund agreement and explained the incentives available for joining.

For private lenders that join the agreement, the sale of claims to personal overdue debt purchase funds is permitted. In addition, those participating in the New Leap Fund can also obtain loans from banks.

A spokesperson for the Financial Supervisory Service stated, "After this briefing, we expect practitioners in the sector to enhance their law-abiding awareness regarding the Act on Registration of Credit Business, Credit Information Act, and the Act on the Protection of Individual Debtors, and to make efforts to improve unreasonable business practices such as the indiscriminate revival of statutes of limitations."

They added, "If any illegal activities such as unlawful debt collection or leaks of personal credit information are discovered, we will impose strict sanctions to establish a sound market order."

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