Korea P2P Finance Association and Financial Services Commission Prepare Their Own Guidelines for P2P Industry

Nov 12, 2018

Korea P2P Finance Association and South Korean financial authorities are working on preparing guidelines for South Korea’s P2P industry. Their goals are to prepare foundation before relevant bills pass through The National Assembly.
According to industries, Korea P2P Finance Association is planning to subdivide classification of goods whenever it makes current status of its members public starting from this month. It has been announcing amount of loans, loan balance, and default rate of its members every month starting from October of 2016.
Real estate will be specified not only as PF (Project Financing) but also as real estate ABL (Asset Backed Loan), real estate subordinated collateral, and NPL (Non-Performing Loan) pledge collateral. Unsecured loan will be divided into loans for small businesses and loans for small and medium businesses. Secured loan will be divided into other moveable assets and security on rights.
As it subdivides classification of goods, it is collecting necessary information and materials from its members. It is planning to announce current status of its members sometime this month. It makes these announcements monthly to protect right to now of investors as they can make more proper selections if they know amount of loans per product of a member.
“We are planning to subdivide classification of goods of our members starting from this month and count default rates of our members.” said a representative for Korea P2P Finance Association. “As a result, we will be making our monthly announcement little bit later than usual this month.”

Korea P2P Finance Association and Financial Services Commission Prepare Their Own Guidelines for P2P Industry

Financial authorities are also announcing its revised guideline next month. It is expected that its revised guideline will allow financial companies to invest into medium-interest rate loan P2P companies.
People are interested on whether investment limit will be eliminated as tax rate is being reduced. According to a guideline that was announced early this year, limitation for normal investors and limitation for real estate loan were limited to $17,690 (20 million KRW) and $8,845 (10 million KRW) respectively.
“We cannot disclose information from a revised plan yet.” said a representative for Financial Services Commission’s Financial Innovation Planning Group. “We are going to revise and enforce our guideline before relevant bills are passed.”
It is expected that this revised guideline will become an essential protection device for investors as timing for legislation related to P2P cannot be promised.
Currently, a legislative bill (Min Byung-du from The Minjoo Party of Korea) regarding online loan brokerage industry, a partial revised plan (Park Kwang-on from The Minjoo Party of Korea) regarding registration of lending companies and protection of financial users, a legislative bill (Kim Soo-min from Bareun Mirae Party) regarding online loan transaction industry and user protection, a legislative bill (Lee Jin-bok from Liberty Korea Party) regarding online investment financial industry and user protection, and a partial revised plan (Park Seon-sook from Bareun Mirae Party) regarding capital market and financial investment industry are pending within The National Assembly.
3 bills that were newly issued have corrected concept of P2P. Bills from members Min Byung-du and Kim Soo-min state P2P as ‘online loan brokerage industry’ while a bill from member Lee Jin-bok state P2P as ‘online investment financial industry’.
Staff Reporter Ham, Jihyun | goham@etnews.com

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