Six online investment-linked finance firms participating in financial institution-linked investments said separate standards are needed to prevent conflicts of interest and distorted competition ahead of the entry of major conglomerates and large financial platforms and institutions into the sector. They said the current system limits financial institutions' linked investment caps, making it difficult for the mid-rate loan market to expand significantly simply due to new entrants.

MoneyMove, Mouda, HonestAI, EightPercent, PFCT and Hanpass Financial issued a joint statement on Wednesday, saying there is a need to establish "reasonable and predictable standards" for new entry into the sector by major conglomerates and large financial platforms and institutions.

They said conflicts of interest and distorted competition could arise if an affiliate of a conglomerate with strong market influence operates both loan comparison and brokerage services and online investment-linked finance, and that fair competition principles should be clearly defined.

They said in particular that the online investment-linked finance mid-rate loan market faces structural constraints on expanding funding supply due to regulations on financial institution-linked investment.

Financial institutions currently must go through application and approval procedures for innovative financial services to participate in linked investments, and investment limits are also set by institution. The companies said that even if a conglomerate affiliate newly enters the market, the overall market may not expand through a large inflow of new funding, and competition among firms could instead intensify over limited investment resources.

The six firms stressed that conflicts of interest should be reviewed separately when a loan comparison and brokerage platform and online investment-linked finance are operated together.

Loan comparison and brokerage platforms compare and recommend products to consumers based on information such as interest rates, limits and approval decisions from multiple financial companies. They said combining this brokerage function with online investment-linked finance, which directly supplies loan products, could lead to issues such as prioritising exposure for its own or affiliate products or using information from competing financial companies.

They proposed that if a firm conducts both loan comparison and brokerage and online investment-linked finance, or enters online investment-linked finance through an affiliate, there is a need to predefine transparency in product recommendation and exposure criteria, protection of competing financial companies' information, fair transaction terms between affiliate and non-affiliate companies, and objective information provision to consumers.

They said such measures are not intended to block market participation by new entrants but are standards to create an environment in which existing and new operators can compete together.

They also stressed the need to create an environment in which consumers can fairly compare various financial products and choose products suited to their circumstances, rather than focusing on platform influence or short-term price competition.

The six firms said they plan to participate in institutional discussions on entry by major conglomerates and large financial institutions into the market and on competition principles, based on opinions from financial authorities, the industry and experts.