FSS Urges Debt Collection Industry to Halt Collection on Statute-Barred Claims

Kim Hyeongwon, Deputy Governor for Consumer Finance,

Meets with Debt Collection Industry Leaders

The financial authorities have urged the debt collection industry to strengthen debt management, including requiring debt collectors to immediately suspend collection activities if a debtor requests a halt based on the completion of the statute of limitations.

On March 25, the Financial Supervisory Service (FSS) announced that it had held a meeting with representatives from the debt collection industry at its Yeouido headquarters in Seoul, presided over by Deputy Governor for Civil Finance Kim Hyungwon, to discuss these matters. The meeting was organized to eradicate unsound business practices and establish a fair debt collection culture.

The FSS emphasized the need to strengthen management of time-barred claims, an issue that has been the subject of ongoing complaints.

Specifically, the FSS reiterated the 'three-stage management system for time-barred claims' proposed at a meeting in October 2023, supplementing it to include the immediate suspension of collection activities for time-barred claims. Under this measure, if a debtor requests the cessation of collection based on the completion of the statute of limitations, debt collection must be halted immediately, and any illegal collection practices must be strictly controlled through debt management systems and other means.

The FSS also announced it would introduce a new reporting format to monitor the status of statute of limitations management, and further strengthen ongoing monitoring. During future inspections, the FSS plans to focus on identifying any related legal violations.

In addition, the FSS pointed out that some debt collection agencies have failed to include mandatory information—such as the amount owed, the duration of default, the deposit account number, and the account holder's name—when notifying debtors of their assignment. The FSS urged strict compliance with regulations and continued efforts to prevent financial accidents.

An FSS official stated, "Through this meeting, we aim to enhance the industry's voluntary compliance awareness and ensure that internal control systems to protect vulnerable borrowers take root in the field through ongoing communication with the sector. Any inadequate procedures or practices identified on site will be swiftly improved by the industry itself, and we will actively guide the establishment of a sound debt collection culture that fosters coexistence with financial consumers."

This content was produced with the assistance of AI translation services.