In response to an investigation request (notification) by the Financial Supervisory Service to an investigative agency of a fintech company, we responded to the client's investigation and revealed the unfairness of the investigation request, resulting in a non-remand decision.

Company A is a company for the purpose of peer-to-peer financing and has been engaged in peer-to-peer financing since before the enactment of the Online Investment and Financial Services Act. Prior to the enactment of the Online Investment and Financial Services Act, the Lending Act was applied to peer-to-peer financing, and peer-to-peer financiers were obligated to comply with the interest limits of the Lending Act.

Company A was careful not to violate the interest limits of the Lending Act while collecting interest from borrowers, and collected fees for using the platform separately from the interest. The Financial Supervisory Service determined that the platform fees collected by A from borrowers should be considered interest, and the prosecutor's office charged A with violating the Lending Act because A illegally collected interest from borrowers in excess of the interest limits of the Lending Act. As Company A had been striving to operate in a compliant manner, it was puzzled by the Financial Supervisory Service's action and sought help from Cha & Kwon Law Offices, which had a good reputation in the P2P finance industry.

By analyzing the structure of the P2P finance industry itself, Cha & Kwon Law Offices actively explained to the investigators that the interest paid by borrowers who executed loans from Company A belongs to investors, not to Company A, that Company A only earns platform fees, and that related organizations such as the Financial Services Commission had distributed an interpretation that platform fees and interest are separate in the P2P finance industry. In addition, we reviewed Company A's business history with Company A's executives and summarized how Company A has been making efforts to comply with the Lending Act and submitted it to the investigative agency, further explaining that even if Company A violated the Lending Act, it did not intend to violate the law.

After reviewing Cha & Kwon Law Offices's submission, the investigative agency determined that it would be legally unreasonable to impose criminal penalties by considering the platform fees received by P2P lenders as interest, contrary to the Financial Supervisory Service's complaint, and therefore decided not to prosecute Company A for violating the Lending Act.

In most cases, when the relevant authorities file charges, the investigating agency trusts the expertise of the relevant authorities and admits the suspect's alleged crimes, which requires a high level of expertise in the content of the suspect's business to respond to such charges. Cha & Kwon Law Offices has a high level of expertise in the P2P finance industry through our own research and consulting with various companies, and we were able to obtain a non-sentencing decision against Company A based on these capabilities.

Although P2P finance has been officially incorporated into the institutional system under the new name of online investment banking, there are still many areas that need to be studied due to the short history of the industry, and there may be cases where the rights and interests of P2P lenders are unfairly restricted due to the lack of clear legal principles. In order to have the capability to respond to such cases, Cha & Kwon Law Offices has been continuously conducting research on the P2P finance industry and has published the results of its research in papers, that have been well-received by experts in the academic community.