The purpose of this paper is to propose a new law called "Financial Service Users Protection Act" in Korea. The rationale for the new proposed act comes from many folds. Since the financial crisis in Korea the number of consumers with bad credit history exploded due to personal bankruptcies and so on. Those with bad credit history usually do not have access to loans or any personal financing products from financial institutions and turn to curb market lenders for personal financing purpose. There are many incidents that curb market lenders charge unreasonably high interest rates or resort to illegal ways of collecting their claim such as physical threat or intimidation. But the borrowing consumers from the curb market have no legal foundation to protect themselves from lenders' unduly activities. It becomes a social concern how to protect consumers from those unduly activities of curb market lenders.
The proposed act is composed of four main parts; 1) registration of curb capital market lenders at the provincial governments, 2) legal limit on the maximum interest rate in curb capital market, 3) curb market client protection from lenders' unduly activities, and 4) prudential regulation for registered curb market lenders.
The paper proposes several alternatives for each of the above four items and explains pros and cons for them. The policy makers and congressman can refer this paper when they propose and examine the actual act.
금융이용자보호에 관한 법률(가칭)의 도입(Financial service users protection act in Korea)
|Series Title; No||정책조사보고서 / 2001-01|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||한국금융연구원; KDI 국제정책대학원|