Panelists in a recently held debate session pointed out that it is imperative to improve the law concerning status succession between mutual aid businesses to protect consumers and make it required for mutual aid businesses to inform consumers of important facts, such as temporary/permanent closure of business or transfer of members, and obtain their consent. In response, the Fair Trade Commission promised that it would take appropriate measures, including an amendment to the existing law.
The debate session, which was hosted by the Autonomous Mediation Committee (Chairperson: Park Hyeong-yeon, attorney-at-law) of the KNCCO, was held at the Ferrum Hall of Ferrum Tower in Seoul at 10:00 on November 16, with approximately 180 people in attendance, including those from political/legal circles, mutual aid businesses, consumer organizations, and the Fair Trade Commission.
In his congratulatory speech, Mr. Roh Hoe-chan, co-representative of the Progressive Justice Party, expressed his regrets over the many cases of loss incurred by consumers due to some irresponsible mutual aid businesses, saying, “We must solve the problem as soon as possible through in-depth review of the matters raised at this session.”
Team Leader Moon Jeong-sin of the KNCCO’s Autonomous Mediation Committee pointed to the status of losses incurred by consumers and cases of dispute arbitration and proposed that a measure be taken to clearly define the scope of responsibilities in the case of status succession between businesses under The Installment Transactions Act and make it required for businesses to inform consumers of important information concerning the business status and obtain their consent in advance.
Mr. Kim Seon-yang, an attorney-at-law of the Autonomous Mediation Committee expressed his view as a lawyer concerning mutual aid businesses that say that they are not responsible for repayment of cash surrender value as they took over only part of the members. He said, “It is reasonable to think that rights concerning business status succession stipulated in The Installment Transactions Act, Article 22 include all relevant responsibilities.”
Upon his turn, Secretary General Hong Ung-sik of the Korea Mutual Aid Cooperative Association explained how his association works for the compensation of consumers’ loss by making it required for mutual aid businesses to set aside down payments made by consumers.
Panelists engaged in debates about a need for a law designed to protect consumers from problems associated with mergers between mutual aid businesses and set a procedure for payment of compensation for losses incurred by customers. They also pointed to a need for the government’s proper control and supervision of the relevant businesses.
Professor Koh Hyeong-seok of Sunmoon University, who took part in the session as a representative of legal circles, said, “Unlike The Commercial Act, the status succession stipulated in The Installment Transactions Act does not allow the business to insist on its takeover-related indemnity. In a mutual aid contract, the guarantee for service performance is important, as required by its nature focusing on mutual aid service rather than on pecuniary compensation.”
Vice Chair Do Yeong-suk of the Consumers’ Union of Korea, a representative of consumers, stated, “It appears that senior citizens account for a considerable portion of the victims in the said cases. The law should be amended to make it required for mutual aid businesses to obtain consumers’ explicit consent about a change in the contents that affect the existing contract and to punish businesses that delay repayment of cash surrender value.”
Park Jun-seung, a mid-level manager of the Korea Mutual Aid Cooperative Association, noted, “Different levels of regulations apply to the Association and banks, which both are parties that receive deposits from mutual aid businesses. It is difficult to control the deposits received by banks. A clear line should be drawn for the movement of deposits between the Association and banks. A measure should be taken to prevent consumer’s losses through local government’s control and supervision of mutual aid businesses that have actually closed their business.
In turn, Park Chang-gyu, a policy aide to Rep. Roh Hoe Chan pointed out that it is difficult to check on the status of down payments, as it requires the consent of the relevant mutual aid businesses under the law. It is necessary to take a measure to handle it as an exception in connection with a need to protect consumers. He added that it is necessary to require banks to submit a periodic report on the promised deposits related to mutual aid businesses to the Fair Trade Commission.
Mr. Kim Gwan-ju, a mid-level manager of the Fair Trade Commission said as a panelist, “An amendment to The Installment Transactions Act is under way. The amendment includes a stipulation that requires a mutual aid business to inform consumers of its plan for the handover of business status succession. We are considering an imposition of penalties on businesses that refuse to pay cash surrender value with no justifiable reason and measures for more stringent control and supervision of mutual aid businesses to protect consumers.”
Concerning the proposals made by the panelists, the KNCCO asked that the amendment to The Installment Transactions Act include stipulations that would be helpful for consumers from a realistic perspective. The KNCCO will also step up efforts to have the relevant institutions apply reinforced control and supervision concerning subscription withdrawal or contract cancellation during the businesses’ temporary closure or suspended business period and improve the procedure for payment of compensation of losses incurred by consumers.
