The Financial Commission plans to lower the penalty standards for minor violations of the Credit Information Law from the current 50% to as low as 1% starting this month. This change aims to address concerns that penalties were excessively high compared to the severity of the violations, which were often significantly reduced during the Commission's review process.
On October 1, the Financial Commission announced a draft amendment to the regulations governing credit information supervision. The amendment details a more nuanced penalty structure based on the severity of the violations. For very serious violations, penalties will range from 65% to 100%, while serious violations will incur penalties of less than 30% to 65%. Minor violations will face penalties of less than 1% to 30%. Previously, a uniform penalty rate of 50%, 75%, or 100% was applied based on severity.
The base penalty is calculated by multiplying the penalty rate by a cap set at 3% of total revenue. The Financial Commission will now consider additional factors in its assessments, including the nature and duration of the violation, the frequency of occurrences, the type of personal credit information involved, the scale of damage, and market impact.
Depending on the circumstances, the penalty rate may be adjusted by up to 10 percentage points, and for minor violations, the calculated rate can be reduced by up to half. Self-correction, reporting, and the establishment of internal control systems will also be recognized as mitigating factors.
The current standard has faced criticism for applying a minimum penalty rate of 50% even for minor violations, leading to disproportionately high penalties. For instance, Dongyang Life was recently fined approximately 7 billion won for violating the Credit Information Law, a significant reduction from the initial estimate of about 140 billion won by the Financial Supervisory Service.
Additionally, the draft amendment includes provisions allowing the Korea Credit Information Corporation to facilitate information sharing among financial institutions and expands the use of technical credit information across the entire financial sector.
The Financial Commission plans to gather public feedback until October 12 and aims to implement the amendment as early as this month.
* This article has been translated by AI.
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