By Park Hyong-ki
Staff Reporter
Private moneylenders and brokers will have to clearly state what they do in advertisements, and add words such as ``private moneylending'' at the end of their official company names, from next year.
For instance, Rush & Cash will have to change its name to Rush & Cash Private Lender. Usurers cannot hide their identity behind words such as capital or credit in their company names.
The move comes as the Financial Services Commission is aiming to boost customer protection against private lenders, who apply higher interest rates to loans than banks and savings banks.
The commission will revise regulations governing private lenders for National Assembly approval in November.
Under the amendment, the government and city offices will have to sternly crack down on lenders that advertise under falsified information.
Private moneylenders fall under the jurisdiction of government and city offices. They do not need to register their businesses with the financial authority.
However, the regulator can conduct inspections on big lenders with assets of over 7 billion won, and discipline them through government offices.
Those that did not register cannot apply an annual interest rate of over 30 percent. If they break this amended rule, they will be fined 30 million won or sentenced to three years in jail.
In addition, lenders will have to receive proper documents showing personal earnings and debts from customers before signing loan contracts.
If documents show customers don't have the sufficient repayment capability, lenders cannot extend loans to them.
When companies break this rule, the regulator will penalize them with a fine of 20 million won.
Customers can no longer secure loans from private lenders via telephone. If they wish to acquire loans via the Internet, they need to submit proper identification papers beforehand.
Lenders will also have to specifically inform loan guarantors of information on interest rates and loan extensions, and provide legitimate documents to both debtors and guarantors.
Meanwhile, customers will be able to get auto loans that also cover auto acquisition tax and insurance fees.
They can gain such comprehensive loans from capital firms extending auto loans beginning next year, and pay auto tax and insurance in installments, in addition to paying for purchased cars.
The commission will submit the revised bill of the Credit Financing Law to the National Assembly next month.
The amendment will strictly hold card companies and their executives responsible for leakage of customers' personal information via computer hacking and signing up card members in a wrongful manner.