The new law will pose a serious obstacle to lending operations of the financial service firms. (image: kobizmedia)
SEOUL, Korea, Feb 23 (Korea Bizwire) – Ahead of the enforcement of a new law on personal information protection on August 7 this year, those in the financial service industry are nervous about what will happen afterward. Unless credit card companies, finance companies, and other smaller lenders are able to find legally permissible grounds for collecting and using people’s national identification numbers, they would be barred from telemarketing activities while facing significant obstacle to their loan business.
Even banks, savings banks, and credit unions will have difficulty using their applicant’s ID numbers to check whether there are any outstanding loans in other lending institutions. In short, the new law will pose a serious obstacle to lending operations of the financial service firms.
That’s because the newly proposed law would significantly restrict the use of national identification numbers. Under the current law, the financial institutions need a single permission from the customer before collecting her ID number. But the new personal information protection law requires that the institutions acquire legal grounds for using the number regardless of whether the customer has approved its use. The provision 24-1 in the new law stipulates that the collection and use of the national ID number be implemented after one year of a grace period, which falls on August 7.
Finance companies will face serious problem unless the provision allowing them to use the ID numbers is worked out among government agencies such as the Ministry of Security and Public Administration, Financial Services Commission, and Financial Supervisory Service. A finance company official said, “If we can’t use the national ID numbers, then our customers need to go to government offices for documents for loans. Although we are fully sympathetic to the new law strengthening personal information protection, this is too much that would effectively freeze our business.”
Private lenders will face more serious problem. As they are not legally recognized as financial institutions, they are unable to collect ID numbers under the new provision. But the lenders insist they definitely need the numbers to check identification and credit standing of new loan applicants. Lee Jae-seon, secretary-general of the Consumer Loan Finance Association, said, “Without being permitted to use the national identification number, it is impossible for private lending institutions to do loan business. We will ask the Financial Services Commission to give us permissions to use the numbers at least as freely as finance companies are allowed.”
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