Regulator to curb credit card firms' loans, marketing costs

SEOUL, June 7 (Yonhap) -- South Korea's financial regulator said Tuesday it plans to limit credit card firms' excessive credit issuance and marketing costs as part of efforts to put the brakes on burgeoning household debts.
Credit card firms' heated competition to issue credit and market their credit card products are adding to the country's much-feared household indebtedness, prompting the Financial Services Commission (FSC) to take measures to slow down the sector's asset growth.
The FSC will adopt "appropriate growth rate" guidance on credit card firms' asset increases, new card issuance and marketing costs, the regulator said in a statement, without giving specifics.
"The FSC took the measures in order to prevent the credit card sector and other credit issuers from triggering risk factors to the local financial industry," it noted.
Local credit card firms saw their assets and marketing costs soar at much faster paces last year than in previous years as the emergence of new credit card firms pushed up competition in the sector.
Local card companies' credit assets grew 6.3 percent annually during the 2006-2009 period before jumping 14.7 percent in 2010, the FSC said. Their marketing costs increased 30.3 percent last year, compared with a 27.1 percent annual gain seen during the 2006-2009 period.
The Financial Supervisory Service, the executive arm of the FSC, is currently conducting one-month inspections till June 24 to look closely into credit card firms' card issuance practices. After the examination, the FSC will come up with proper punishment for the firms that violated related regulations, the regulator said.
pbr@yna.co.kr