The government is pushing for a measure to immediately freeze accounts involved in illegal transactions. Frozen criminal funds in such accounts will be swiftly returned to victims, supported by return litigation. Additionally, the actual interest rate for loans meant to prevent illegal private financing, which was previously up to 16%, will be significantly reduced to around 5-6%.
On the 29th, the financial authorities held a field meeting to eradicate illegal private financing and announced these measures. Firstly, in the first quarter of the next year, a one-stop comprehensive dedicated support system for victims of illegal private financing will be established. When reported to the Financial Supervisory Service, a dedicated person from the Integrated Support Center for Low-Income Finances will be assigned to submit damage reports, and the FSS will take initial actions, such as issuing warnings to illegal private financiers.
In addition, they will simultaneously proceed with requesting police investigations, blocking illegal means, and appointing representatives for debtors through the Legal Aid Corporation. Through the Legal Aid Corporation, legal relief through lawsuits such as claims for damages and restitution of unjust gains will be conducted.
During this process, accounts confirmed to have been directly used for illegal private financing will have all transactions immediately halted until the account holder re-completes strengthened customer verification.
Furthermore, the current actual interest rate of 15.9% on loans for preventing illegal private financing has been ‘significantly’ lowered. An annual supply of approximately 200 billion won for such loans is available even to financially excluded groups, like defaulters, but due to low recovery rates, the interest rate has been high.
From this year, the government plans to lower the interest on these loans to 12.5% annually and establish a payback system that returns 50% of the interest paid upon full repayment, reducing the actual interest burden to around 6.3%.
Particularly for socially considerate groups like basic livelihood security recipients, low-income households, and self-support workers, the interest rate will be lowered to 9.9% annually, and the actual interest burden will reduce to as low as 5% when fully repaid.
The financial authorities also held a briefing session with the Korean Journalists Association, etc., to establish reporting standards aimed at preventing illegal private financing damage, and recommended that damage prevention advice be included in articles as part of public awareness efforts.
Meanwhile, since last July, a basis for nullifying the principal and interest of antisocial loan contracts exceeding an annual interest rate of 60% has been prepared. Reports and consultations regarding illegal private financing damage increased by 15.3% from a monthly average of 1,314 cases in the first half of the year to 1,515 cases from July to November.
If you are exposed to illegal private financing damage, you can report it to the Financial Supervisory Service (☎1332) to receive necessary assistance. In cases of excessive debt difficulties, support is available from the Korea Inclusive Finance Agency (☎1397) or the Credit Counseling and Recovery Service (☎1600-5500). Additionally, loan contracts exceeding a 60% interest rate are void in both principal and interest.