Financial Supervisory Service Governor Lee Chan-jin was absent from the CEO meeting with licensed moneylenders and loan brokers held at the FSS headquarters in Yeouido, Seoul, on Tuesday. Assistant Governor Kim Hyung-won, in charge of consumer finance, presided over the meeting instead.
The FSS explained this was "in accordance with customary practice." However, industry observers suggest the licensed lending sector is being marginalized as illegal private lending continues to proliferate.
Since taking office in August last year, Governor Lee has met with CEOs across all financial sectors, including banking, insurance, credit cards, savings banks, securities firms, and asset management companies. On February 25, he personally heard from foreign financial institution CEOs, including those from Morgan Stanley, BlackRock, and Industrial and Commercial Bank of China. For the lending industry, however, an official two ranks below the governor presided over the meeting.
Industry participants welcomed the rare meeting with regulators but expressed disappointment at how authorities perceive their sector. This sentiment is particularly acute given the surge in illegal private lending since the second half of last year, which has heightened the importance of licensed lenders.
The FSS received 17,500 reports of illegal private lending damages last year, the highest in 13 years. According to the Korea Licensed Moneylenders Association, victims of illegal lenders paid an average annual interest rate of 546% on loans averaging 11 million won last year.
"The lending industry is always treated as a stepchild," one industry official lamented.
At the meeting, the FSS urged lenders to strengthen borrower protections by avoiding excessive debt collection and indiscriminate revival of statute-barred debts.