|Customers line up on Sunday to renew or cancel their credit cards at Lotte Department Store in the Jung-gu district of Seoul in the aftermath of a massive credit card data breach. (Yonhap)|
Financial companies will be banned from promoting or selling loan products over the telephone or the Internet until March this year following measures aimed at preventing further leaks of personal information, authorities said Sunday.
The extensive ban could be prolonged if necessary, they added.
The move triggered immediate backlash from companies, but the government indicated that it would not back down until the financial security system is fully reinforced.
“One of the key reasons behind the circulation of excessive personal information is overheating in the loan-selling market,” said Shin Je-yoon, the Financial Services Commission chairman. “We will therefore seek to minimize such sales activities, unless they are deemed to be absolutely crucial and legitimate.”
The announcement from Sunday’s meeting came as the nation reels from a series of data breaches by major credit card companies, including KB Kookmin, NH NongHyup and Lotte.
The authorities also said they would be implementing a new regulation obligating financial companies to clarify how they gained access to personal information when selling loan products.
Earlier on Friday, the FSC handed down an administrative guidance to all local financial companies demanding that they discontinue their sales and marketing via all communication lines including the phone, email and SMS.
Based on these new rules, financial companies will be prohibited from selling or promoting loan products through these channels, starting from Monday through the end of March.
The sales of credinsurance products, indicating the sales of insurance products by credit card companies, will also be banned during this period.
Companies that are heavily dependent on telemarketing such as online insurers, however, will be exempt from the ban as they have few other means to sustain their business, FSC officials explained.
The FSC pledged to hand down the maximum punishment on companies including business suspensions should they fail to abide by the latest guidelines.
According to the credit information act, the FSC has the authority to establish regulations on the collection, circulation and use of credit information.
The ban on loan telemarketing, though temporary, is to place considerable burden on the subject companies, especially the small and medium-sized insurance companies.
None, however, openly expressed discontent so far, in awareness of the angered public emotion over the information leak scandal.
A total of 5.25 million credit cards had been reissued or cancelled from the three disputed card companies as of Sunday noon, according to the FSC.
By Bae Hyun-jung (email@example.com)