(1) Reasons for Proposal

This aims to enact detailed regulation on the provisions for supervising online investment-linked financial business to prescribe matters delegated to the Governor of the Financial Supervisory Service and other matters required to enforce (August 27, 2020) the Act on Online Investment–Linked Financing and User Protection (hereinafter,  the ‘P2P Act’) aimed at the sound promotion of online investment-linked financial business and user protection. 

(2)Major Provisions

□ Crystallize the obligation of online investment-linked financial business proprietors (hereinafter, ‘P2P financial business proprietors’) to disclose information (Articles 3, 11).

• Determine the types* of linked-loan instruments to be classified when P2P financial business proprietors disclose cumulative linked-loan amount, the balance, default rate, etc., and prescribe the specific information** to be provided to investors by type of linked loan instrument.
  * ① Loans linked to real estate project financing, ② loans linked to collateral for real estate, ③ loans linked to bill and trade receivables, ④ other collateral-linked loans, ⑤ personal credit-linked loans, ⑥ corporate credit-linked loans
  ** ① Names of project implementer, constructor, details of agreement on responsible completion of construction, etc. ② details of appraisal of collateral, ③ information about borrower and obligor for redemption, ④ establishment of security and disposition plan, expected collateral recovery price, etc. ⑤ personal history such as borrower’s credit rating, bankruptcy, etc. ⑥ closing financial statements of the immediately preceding year, sales status, etc.

□ Crystallize the regulations on the financial soundness of P2P financial business proprietors (Article 2, 4, [attached Table 1], Article 5)

• Assess the soundness of delinquent credit and prepare* a plan to secure its soundness in consideration of its recoverability, etc., to register the P2P business.
  * Borrowers’ and investors’ interests shall not be unreasonably infringed.
• If P2P financial business proprietors, by their own calculations, make linked investments in loan instruments linked to housing collateral, the deemed requirement rate of collateral calculated from dividing the sum total of the linked-loan amount, senior credit, leasehold deposit (including the small amount of leasehold deposit to be preferentially paid) by the collateral value of the house in question shall be within 70%. 
•  A linked investment and a loan agreement with virtual assets, derivatives, listed stocks designated as issues with investment risk, game items, casino chips, etc., pledged as security shall be prohibited.

□ Crystallize the standards for internal control of P2P financial business proprietors (Article 9, [attached Table 4])

• Prescribe matters to be included when establishing the standards for internal control in connection with handling individual business such as credit evaluation of borrowers, provision of internal and external information, management and protection of investors’ credit information.  

□ Prepare forms for business report (Article 13, supplementary form)

• Fix the forms for business reporting related to P2P financial business proprietors’ business, financial status, the current status of linked loans and linked investments, governance, matters related to transactions with major stockholders, etc. 

 □ Prepare other forms (Articles 6, 7, 10, and 12)

• Fix the forms for concurrent business, ancillary business, business entrustment report, report on changing the standards for internal control, loan application in excess of credit line and report, etc.