Law takes aim at loan companies

People convicted of violent crimes or violating the debt collection law will not be allowed to work for loan companies until a certain amount of time has passed after their release.

According to the Financial Services Commission yesterday, a revised enforcement ordinance regarding the loan company act will include that provision when it takes effect on April 26.

The move is aimed at preventing loan companies from doing businesses with the help of gangsters.

Under the revised ordinance, an ex-convict who completed or was exempted from imprisonment in the previous five years will not be allowed to work at a loan company.

The same restrictions will apply to a person who was fined for violating debt collection laws within the previous two years.

If a loan company violates the new ordinance, its business may be suspended for a maximum of nine months or a fine of less than 20 million won ($17,600) will be imposed.

Moreover, loan companies subject to investigation by the financial watchdog will henceforth be required to have total assets of 10 billion won within the last full business year and have issued shares that are publicly traded or will be traded in the near future.

In addition, lenders with total corporate assets and liabilities of more than 7 billion won or companies with more than 300 employees and assets of at least 7 billion won will now be subject to investigation.

“As standards for operating in the industry have been set higher than before, the number of companies subject to investigations by financial authorities will drop slightly from the current 100 when we start applying the reform measures,” an FSC official who wanted to remain anonymous said last month.

By Jung Jae-yoon [jyj222@joongang.co.kr]