Financial Services Commission approves partial revision of the Credit Information Supervision Regulation  – Regulations on false evaluations and forced evaluation results by corporate credit inquiry companies

Purpose

The South Korean government has revised the “Credit Information Business Regulation” to include stricter rules against fake evaluation practices by credit information businesses. The revision aims to ensure fair and transparent credit evaluations, particularly for technology finance businesses.

This update is a response to the need for more stringent regulations in the technology finance sector, where fake evaluations can have significant consequences. By revising the regulation, the government seeks to protect consumers from unfair business practices and maintain trust in the financial system.

The revision includes provisions that explicitly state the conditions under which credit information businesses will be penalized for engaging in fake evaluation practices or coercing specific evaluation results. This ensures that businesses are held accountable for their actions and cannot avoid consequences by exploiting loopholes in the regulation.

Effects on Industry

The revised regulation is expected to have significant implications for the technology finance industry, particularly credit information businesses. The new rules will:

1. Enhance transparency: Credit information businesses must now disclose their evaluation methods and criteria, ensuring that consumers are aware of how their creditworthiness is being assessed.
2. Reduce fake evaluations: By introducing penalties for fake evaluation practices, the revised regulation discourages businesses from engaging in such activities, promoting a culture of honesty and integrity within the industry.
3. Improve competitiveness: The increased transparency and accountability will lead to more competitive credit information businesses, as those that adhere to the new rules will be able to demonstrate their commitment to fair business practices.

Relevant Stakeholders

The revised regulation affects various stakeholders in the technology finance sector:

1. Credit information businesses: These businesses must now comply with stricter regulations regarding fake evaluations and coercing specific evaluation results.
2. Technology finance companies: Companies that rely on credit information services will benefit from the increased transparency and accountability, as they can trust that their creditworthiness is being assessed fairly.
3. Consumers: The revised regulation protects consumers by ensuring that credit information businesses operate transparently and honestly.

Next Steps

To comply with the revised regulation:

1. Credit information businesses must update their evaluation methods and criteria to meet the new standards.
2. Technology finance companies should review their relationships with credit information businesses to ensure compliance with the revised regulation.
3. Consumers can expect more transparent and honest credit evaluations, which will help them make informed decisions about financial products.

Any Other Relevant Information

The revised regulation is part of a broader effort by the South Korean government to improve the technology finance sector. By addressing concerns around fake evaluations and coercing specific evaluation results, the government aims to promote a culture of integrity and trust within the industry.

This update demonstrates the government’s commitment to protecting consumers and maintaining a fair financial system. As the regulation takes effect, stakeholders can expect increased transparency and accountability in the credit information business sector.

The revised regulation also sets an example for other countries looking to establish similar regulations and ensure that their technology finance sectors operate with integrity and transparency.