FSC mulls raising P2P investment threshold
The current ceiling stands at 10 million won ($8,900).
“The reason why [the Financial Services Commission (FSC)] set the ceiling was to protect investors when there was no specific regulations or laws for the sector,” said Song Hyun-do from the FSC’s financial innovation division during a meeting.
“But by the time that the sector is fully regulated [by the FSC], it is possible to raise the investment ceiling,” Song said.
Chairman Choi Jong-ku of the FSC said the regulator will come up with regulations based on discussions held Monday at a meeting jointly held with the Financial Supervisory Service (FSS) and Korea Institute of Finance, a research institute under the FSC.
In Korea, P2P firms, which connect borrowers with investors through online platforms, are not under the direct supervision of financial authorities. The agency indirectly supervises them with a set of guidelines and by requiring the registration of P2P firms’ lending subsidiaries, but not all P2P firms have these subsidiaries.
The push comes as the P2P market has grown rapidly in recent years. Accumulated P2P loans jumped to 4.8 trillion won last year from 600 billion won in 2016.
At the meeting, the participants also demanded the regulator allow other financial companies, such as card companies, savings banks and private equity firms, to invest in the products offered by P2P platforms. The request is designed to increase the cash inflow with the participation of institutional investors.
Some P2P players are currently self-regulated using rules drafted by an association representing local P2P lenders.
All association members must manage investor funds and borrowers’ interest payments in separate accounts to safeguard customers’ funds.
BY PARK EUN-JEE [email@example.com]