P2P industry requests regulatory frameworkAssociations representing the peer-to-peer (P2P) investment industry are pushing for more regulation of the emerging financial sector as the lack of a regulatory framework hampers further growth.
Five bodies - the Korea Internet Corporations Association, Korea Startup Forum, Korea P2P Finance Association, Marketplace Finance Association and Korea Fintech Industry Association - released a joint statement ahead of a series of bill review sessions that will be held through April.
Five bills concerning the regulation of the P2P industry are currently pending at the National Assembly.
“[The National Assembly] should pass the bills for consumer protection in the industry,” the statement said.
P2P companies, which operate online platforms connecting investors and borrowers, are currently not under the direct supervision of the financial authorities in Korea.
Due to the lack of a legal framework, the online lending firms, also known as marketplace lenders, have decided to police themselves as legislation intended to regulate the industry has been caught up in the National Assembly for more than a year.
Major players, such as Lendit and 8percent, proposed progressive self-regulatory measures that assigned members of the associations have to follow.
Among others, all members will be required to manage investor funds and borrowers’ interest payments in separate accounts to safeguard them in case of bankruptcy or other unforeseen events.
P2P investment transactions stood at 5 trillion won ($4.4 billion) as of the end of 2018, while the number of investors amounted to 250,000.
The major culprit behind the sector’s tarnished reputation is Roof Funding, once the third largest P2P player in Korea, after the CEO was arrested on accusations of fraud and misappropriation of funds last year.
BY PARK EUN-JEE [email@example.com]