The Financial Supervisory Service has decided to increase the personnel to monitor the illegal collection practices of illegal private lenders. This measure follows President Lee Jae-myung’s recent comments highlighting issues related to illegal collections and requesting improvements, intending to strengthen the monitoring system through an expansion of personnel.
According to the financial industry on the 26th, the FSS plans to increase its personnel monitoring illegal collection practices by illegal private lenders from the current 16. These personnel will deliver warning messages to illegal lenders to refrain from illegal collections and will handle requests for blocking phone numbers or cooperating with investigative agencies if violations continue. If a debtor reports illegal collection practices, the FSS will take action by receiving the collector’s contact information.
The FSS plans to expand its personnel through new hires, but the exact scale has not yet been determined. Currently, this task is overseen by the FSS’s Bureau of Response to Civil Damage, and personnel will be added to this department.
This expansion aims to alleviate the issue of concentrated illegal collections during the time it takes for a debtor to apply for a representative through the Legal Aid Corporation and to actually appoint one, which typically takes about 10 days. A debtor’s representative is a lawyer appointed to protect debtors from illegal collections. It has been reported that illegal private lenders often try to extract as much money as possible through coercive collections before a debtor’s representative gets involved.
It is currently difficult to reduce the time required for appointing a debtor’s representative immediately. According to the FSS, the average monthly number of reports of illegal collections this year is about 700, which is approximately three times higher than the previous year. Currently, there are only about 60 lawyers handling debtor representative duties at the Legal Aid Corporation, which is already overburdened, making it challenging to significantly reduce the time required for appointment.
Due to the recent economic downturn, the damage from illegal private lending is also surging. According to documents received from the FSS by People Power Party lawmaker Yoon Han-hong, the number of reports and consultations related to illegal private lending in the first half of this year was 9,842. This accounts for 63% of the annual total number of reports and consultations (15,397) from last year, achieved in just the first half of the year.
In response to the worsening issues related to illegal collections, President Lee also directly ordered improvements. On the 22nd, President’s Office spokesperson Kang Yu-jung reported that President Lee pointed out that excessive debt and repayment burdens due to illegal private lending, as well as collection pressure, are contributing factors to the extreme choices made by vulnerable populations. Furthermore, he raised concerns that facilitating the collection process for financial institutions could infringe upon the rights of debtors.