South Korea Financial Services Commission unveils eight measures to expand P2P lending to borrowers with low and medium credit scores

The South Korea Financial Services Commission unveiled eight measures to expand online investment-linked finance for individuals and sole proprietors with low and medium credit scores, improve lending infrastructure and strengthen investor protection. The plan seeks to reduce the sector’s reliance on real estate-backed loans and stock loans, which account for about 70% of lending, while credit loans have averaged only 11.6% over five years despite cumulative lending exceeding KRW 20 trillion. Qualifying P2P platforms with strong lending records, alternative credit assessment capabilities and financial soundness would receive higher limits for credit loans to targeted borrowers. Platforms’ own investment limit would rise from 20% to 40% of an offering, while financial institutions’ linked investment limit would increase from 40% to 50%. The general investor limit would rise from KRW 40 million to KRW 50 million, and linked investment would expand to mutual finance institutions and sole proprietor credit loans. Infrastructure changes would allow investors to extend maturities within existing investment amounts and connect platforms to a credit assessment model designed for small businesses. Investor protection measures include external audits of key performance indicators, disclosure of loss rates alongside delinquency rates, stronger review of advertising and guidelines for managing long-delinquent loans. The commission also plans a clearer framework for closing or deregistering failed platforms while preserving their obligations to investors and protecting proceeds derived from loan assets. It aims to begin reviewing applications for the qualifying-platform regime and expanded financial institution investment in the first quarter of 2027, and to prepare necessary draft legislative amendments by then.