Prepaid service companies, including those involved in prepaid installment transactions, will be required to consider stability, liquidity, and profitability when managing consumer advance payments. Large firms with advance payments exceeding 100 billion won must establish and operate an Advance Payment Management Review Committee to ensure the stability of fund management and transparency in decision-making.
The Fair Trade Commission announced on the 24th that it will issue an administrative notice for 20 days until September 14 regarding the proposed revisions to the 'Consumer Protection Guidelines for Prepaid Installment Transactions.'
The revisions aim to ensure that consumer advance payments, made monthly for services such as funerals or weddings, are managed safely to fulfill contractual obligations and refund payments. The guidelines will include principles for managing advance payments and a framework for self-assessment.
Under the proposed revisions, prepaid installment companies must balance stability, liquidity, and profitability when managing advance payments. They must conduct thorough reviews before engaging in high-risk transactions, such as excessive investments in high-risk assets like derivatives, virtual assets, and leveraged financial products that pose a risk of principal loss.
Additionally, a new internal control system will be established to help prepaid installment companies manage risks. All companies must create 'Advance Payment Management Guidelines' detailing the range of investable assets and risk management procedures, and report an 'Advance Payment Management Plan' to their board of directors each fiscal year.
In particular, large firms with advance payments exceeding 100 billion won at the end of the previous fiscal year must establish and operate a consensus-based 'Advance Payment Management Review Committee.' When the committee reviews transactions with controlling shareholders or investments in high-risk assets like virtual assets, it must also seek input from employees of payment obligors, such as mutual aid associations or banks, as well as external experts in accounting and finance.
The Fair Trade Commission plans to finalize the revisions after gathering feedback from stakeholders during the administrative notice period.
The Fair Trade Commission announced on the 24th that it will issue an administrative notice for 20 days until September 14 regarding the proposed revisions to the 'Consumer Protection Guidelines for Prepaid Installment Transactions.'
The revisions aim to ensure that consumer advance payments, made monthly for services such as funerals or weddings, are managed safely to fulfill contractual obligations and refund payments. The guidelines will include principles for managing advance payments and a framework for self-assessment.
Under the proposed revisions, prepaid installment companies must balance stability, liquidity, and profitability when managing advance payments. They must conduct thorough reviews before engaging in high-risk transactions, such as excessive investments in high-risk assets like derivatives, virtual assets, and leveraged financial products that pose a risk of principal loss.
Additionally, a new internal control system will be established to help prepaid installment companies manage risks. All companies must create 'Advance Payment Management Guidelines' detailing the range of investable assets and risk management procedures, and report an 'Advance Payment Management Plan' to their board of directors each fiscal year.
In particular, large firms with advance payments exceeding 100 billion won at the end of the previous fiscal year must establish and operate a consensus-based 'Advance Payment Management Review Committee.' When the committee reviews transactions with controlling shareholders or investments in high-risk assets like virtual assets, it must also seek input from employees of payment obligors, such as mutual aid associations or banks, as well as external experts in accounting and finance.
The Fair Trade Commission plans to finalize the revisions after gathering feedback from stakeholders during the administrative notice period.
* This article has been translated by AI.
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