The financial authorities are planning to strengthen the sound management of domestic credit card companies this year.
In the aftermath of the expansion of non-face-to-face channels due to the expansion of Corona 19 last year, indiscriminate business expansion or illegal recruitment activities are increasing. In particular, there is growing concern that credit card companies are unable to obtain proper delinquency information due to the government’s delay in loan maturity and interest repayment.
According to the Financial Supervisory Service on the 6th, the number of sanctions for illegal business recruited by card companies at the end of last month reached a record high of 531. The number of card applicants has decreased by half compared to when they received 504 sanctions in 2017, but the number of sanctions has increased. As card recruiters registered as private businesses face-to-face business became difficult, it is believed that they have increased illegal recruitment activities through online. In the case of providing an economic benefit in excess of 10% of the annual fee, a maximum penalty of 1.2 million won is imposed on the card solicitor for illegal solicitation.
However, card recruiters are strengthening their operations at the risk of taking. This is because the business environment has become difficult due to the coronavirus, and the allowance per card issuance of credit card applicants has been significantly reduced in the aftermath of the merchant fee cut. As the business environment becomes difficult, some card companies are competing for recruitment by first signing up through the fintech platform. After the card is issued through an application (app), if you pay 100,000 won for a certain period, it will return 100,000 won.
With the increase in issuance of’Do Not Ask Cards’, which are difficult to monitor inside, the Financial Supervisory Service conducted an inspection of the card companies at the end of last month. This is because, as credit card issuance has increased in Fintech apps due to its strength of convenience, cards may be issued without proper credit evaluation. In fact, with the recent simplification of the card issuance process, reports are being shared in online communities that low-credit or unemployed persons with grade 7 or higher have also received credit cards.
Credit card companies are in the position that they are issuing cards based on quantitative evaluation standards as the credit rating model is advanced. An official from a card company said, “As competition in the card industry intensifies, there are cases where cards are issued with personal credit information stored in fintech apps. This is because the issuance standards have been diversified.” I drew it. As the credit rating model is advanced, it is a position that cards are issued based on quantitative evaluation criteria. According to the’Best Standard for Issuance and Use of Credit Cards’, a credit card can be issued only if the monthly disposable income is 500,000 won or more and the personal credit rating is within 6th grade.
The Financial Supervisory Service also judges that there is no big problem yet, but the indiscriminate card issuance is due to the high risk of mass production of bad creditors. In particular, the need to strengthen management and supervision is facing a period of upheaval in the financial policy of the common people, such as the end of the loan maturity extension and the deferment of interest repayment measures in March, and the legal maximum interest rate cut.
In particular, the fact that credit card companies are unable to obtain proper delinquency information due to loan maturity extension and interest repayment deferral measures is considered a concern about the soundness of future card companies. Currently, there is no delinquency, so a new card was issued, but if the postponement measure ends in March, the card may be overdue. A card company official said, “We are looking for ways to maintain soundness, such as provisions, as the deferral measures for repayment of credit cards will end in March and potential insolvency is likely to increase.”
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