KB Kookmin Card, NH NongHyup Card, and Lotte Card are to be banned from recruiting new customers or issuing loans for the next three months, starting Feb. 14, according to the Financial Services Commission.
The three-month suspension, which is the maximum sanction possible under the current law, is expected to take effect following a 10-day preparatory period starting Monday.
This will be the first nationwide business suspension in the credit card sector since 2003.
During the three months, the credit card companies will be banned from recruiting new customers, issuing new loans, or expanding their business in any form.
They will, however, continue to provide basic services to customers, such as card reissuance and regular credit card payments, officials said. Top executives, too, will face disciplinary action such as dismissal, though most already offered their resignation last month.
These measures are expected to hit the card companies’ annual figures hard, as they effectively ban most profit-making activities. The three card companies have already reissued over 3 million cards so far and may also be forced to pay out substantial compensation, depending on the outcome of class action suits.
In addition to such penalties, all financial companies will be banned from promoting or selling loan products over the telephone or the Internet until March, as a temporary measure until the financial security system is reinforced.
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