Assemblyman Yoon Chang-hyun Proposes Amendment to the Financial Consumer Protection Act
Regional Agricultural Cooperatives, Forestry Cooperatives, and Saemaeul Geumgo Also Defined as Financial Companies
Plans to Regulate Consumer Protection Blind Spots
"Dear customers, please cancel your high-interest savings accounts." In December last year, Namhae Livestock Agricultural Cooperative, Donggyeongju Agricultural Cooperative, and Hapcheon Agricultural Cooperative requested customers with fixed deposits offering 8-10% interest rates to terminate their accounts. Due to a staff error during the non-face-to-face subscription process, a large number of subscribers joined, leading to a management crisis, prompting the cooperatives to plead with customers. Those who canceled their accounts ended up losing the high-interest deposit benefits they had initially gained. If the subscribers had maintained their accounts, that would also have posed a problem. In the event of bankruptcy, existing customers could be at risk. While deposits up to the protection limit of 50 million KRW can be refunded, recovering amounts exceeding this limit is practically impossible.
A bill to prevent a 'second high-interest savings account cancellation' incident has been proposed. On the 9th, Yoon Chang-hyun, a member of the People Power Party, officially introduced an amendment to the Financial Consumer Protection Act to apply it to all mutual financial institutions. This reflects the Financial Services Commission's work report for this year and is a government-ruling party agreement following consultations.
The amendment defines agricultural and fisheries cooperatives, forestry cooperatives, and Saemaul Geumgo as 'financial companies' so that all mutual financial institutions fall under the law's application. To remedy consumer damages, mutual financial sectors are included as 'adjustment target institutions.' It also establishes grounds to grant the authority to order business suspension and revoke approval for mutual financial institutions to their respective supervisory ministries. The core content is to regulate mutual financial institutions, which have been in a consumer protection blind spot, to prevent accidents.
Representative Yoon explained, "If the current law had applied to these cooperatives, internal control standards would have reviewed fund management plans before product sales, and appropriate interest rates would have been presented. Customers would have been subject to disclosure obligations regarding subscription limits, subscription amounts, and interest rate levels, preventing incomplete sales situations where customers are begged to cancel because too much money has been gathered."
He added, "Consumers using cooperatives other than credit unions cannot exercise the 'right of withdrawal' within a certain period or the 'right to cancel illegal contracts' if financial product sellers violate sales-related regulations, making them more vulnerable compared to consumers in other financial sectors. Therefore, consumer protection measures for mutual financial consumers must be strengthened." Since this is a law related to consumer rights protection and has been agreed upon with the government, discussions in the Political Affairs Committee are expected to proceed swiftly.
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