The Financial Services Commission has initiated a financial reform effort under the banner of "Inclusive Finance Transformation." President Lee Jae-myung has sharply criticized the financial sector, describing it as engaging in "primitive predatory finance" and emphasizing the need for policies that enhance the public nature of finance and protect vulnerable populations.
During the 5th meeting on Inclusive Finance Transformation held at the Credit Recovery Committee's Integrated Support Center for Low-Income Individuals on May 28, Financial Services Commission Chairman Lee Ok-keun stated, "It is now time to examine the structural causes of repeated financial exclusion and develop fundamental improvement measures. Inclusive finance is a transformative process aimed at making finance beneficial to people's lives and saving lives."
This meeting aims to redesign the financial system into an "inclusive structure," going beyond merely expanding access to financial services for low-income individuals. President Lee has recently conveyed messages targeting the financial sector, stating, "The belief that 'making money is the only goal' is problematic," and that it is inappropriate to enjoy benefits without bearing burdens, underscoring the necessity for financial reform.
The newly launched Inclusive Finance Strategy Promotion Team will operate through four divisions: supervision, policy for low-income individuals, financial industry, and credit infrastructure. Each division will discuss ways to incorporate inclusive finance principles into the management of financial institutions and improve soundness regulations. Notably, the credit infrastructure division will work on enhancing access to finance for low- and medium-credit individuals by moving away from the current credit evaluation methods that favor high-credit individuals and utilizing non-financial information.
Additionally, the Financial Services Commission plans to transition the debt collection industry from a registration system to a licensing system to improve long-standing and excessive collection practices. This change aims to strengthen debtor protection through effective management and oversight and to eliminate regulatory arbitrage. Consequently, only corporations with over 50% investment from financial companies that include at least five professionals, such as lawyers, and meet cybersecurity requirements will be allowed to operate in the debt collection industry.
To curb excessive collection incentives, the Financial Services Commission will also restrict the dual operation of lending and loan brokerage businesses. This measure aims to reduce the practice of repeatedly engaging in excessive collections after acquiring long-term delinquent debts and to embed debtor protection within the system.
The Financial Services Commission plans to prepare a legislative amendment to the Moneylending Business Act, which includes the transition to a licensing system for the debt collection industry, by August and aims to complete the legislative process in the National Assembly by the end of the year. The financial sector anticipates increased pressure for both the expansion of low-income financial services and the tightening of debt collection regulations.
Chairman Lee stated, "We will ensure that inclusive finance is not a temporary measure but a structure that operates sustainably within financial companies and the financial system. We will thoroughly discuss and institutionalize this through the promotion team. If the transition to a licensing system for the debt collection industry is implemented smoothly, the industry will qualitatively grow, supporting the credit system while protecting debtors and transforming into a trustworthy market."
* This article has been translated by AI.
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