Gov’t to tackle dubious P2P lending
The government will announce measures to tackle abusive and deceptive peer-to-peer (P2P) lending practices amid a rise in the number of fraud cases being reported in the sector, officials said Thursday.
Kim Yong-beom, vice chairman of the Financial Services Commission (FSC), said disputes between investors and P2P lenders are on the rise with some P2P firms illegally raising funds.
Lax regulation on entry into the P2P sector is one of the reasons for such problems, Kim said.
According to data compiled by the FSC, the accumulative value of P2P lending jumped to 3.5 trillion won ($3.23 billion) at the end of May, from some 40 billion won at the end of 2015.
During the same period, the number of P2P firms rose to 178 from 27, the FSC said.
Last year, the government tightened guidelines for P2P lending, banning a person from investing more than 10 million won into a P2P firm.
P2P lending refers to a new type of loan extension to individuals or businesses through social network services, or the Internet, and covers a wide range of services, including loans to startups and self-employed businessmen.