1. Reason for revision

Its purpose is to improve the predictability of regulations and protection of consumers in installment transactions by preparing a basis for registration cancellation if the financial requirement is not met, thereby prescribing the time period for local governments to process reports on prepaid installment transaction operators and establishing the liability of prepaid installment transaction operators to notify consumers of the prepayment content.

2. Main content

A. Preparing the basis of registration cancellation if the financial requirement is not met (Article 19, etc. of draft)

1) The existing Act prescribes the liability of an individual who intends register a prepaid installment transaction business by fulfilling the prerequisite of KRW 15 billion in capital.

2) In addition, the prepaid installment transaction operator shall maintain KRW 15 billion in capital after registration; and in case of violation, the head of corresponding government authority may revoke the registration.

B. Statement of the period to process the reporting of prepaid installment transaction operators (Article 18, etc. of draft)

1) According to the existing act, prepaid installment transaction operators shall report any changes in information/ details of registration, succession, and transfer contracts to local governments but the processing period is not specified.

2) Therefore, the purpose is to improve predictability for applicants by stipulating the period for corresponding government authorities to process reporting by prepaid installment transaction operators.

C. Establishment of liability for notification of the content related to prepayment (Establishment of Article 27-2 of draft)

Prepaid installment transaction operators shall notify the content related to prepayment to consumers after confirmation by obligatory payers (banks and mutual aid associations, etc.) and shall submit the notification content to Fair Trade Commission. The penalties for violation are provided.

D. Preparation of the provisions for the application of Fair Trade Act as to penalty fines (Article 47 of draft)

1) As the existing Act has no provisions allowing joint payment of penalty fines or deficits disposal, installment payment of penalty fines or collection of penalty fines are impossible in fact; in this case, the method for processing is unclear.

2) Therefore, when the penalty fine is paid in installments on joint payment or deficits disposal of penalty fines as the regulation applies under the Fair Trade Act, the processing method is made clear in the event of non-collection of penalty fine.

E. Establishment and improvement of regulations as to fines for negligence

1) According to the existing Act, there are no provisions to impose fines for negligence in the event of submitting false audit reports or false reporting notifications and the amount and condition of fines for negligence to be imposed in case of a lack of an audit, failure to submit data, or hindering an audit are different from other consumer Acts (Act on the Consumer Protection in the Electronic Commerce Transactions, etc. and Door-to-Door Sales Act).

2) Therefore, the basis to impose fines for negligence is established for submitting false audit reports or false reporting notifications and the amount and condition of fines for negligence to be imposed in case of a lack of an audit, failing to submit data, or hindering an audit is revised to reflect continuity with other consumer Acts.