Finance User Protection Bill Not Passed

The new `Bill Regarding Finance User Protection ` (BRFUP) by the government that tried to protect debtors from private money lenders did not pass in this special session of the National Assembly. For this reason the schedule, set by the government originally wanting to enforce the law from July, will be anticipated for delay.

An official of Ministry of Finance and Economy (MFE) said yesterday, ``The bill regarding finance user protection that was sent to the Bill Judging Sub-Committee of the National Assembly was not able to pass due to the congestion of the National Assembly schedule.``

The Finance and Economy Committee (FEC) of the National Assembly passed the Revised Bill regarding the Special Tax Case and the Corporate Restructuring Acceleration Law on 25th, but they could not carry out the deliberation on the BRFUP due to lack of time.

The lawmakers must finish the deliberation on the MFE and send the bills to the Legislation and Judiciary Committee (LJC) three days before the assembly plenary session is to begin. Considering the plenary session schedule, which has been set from 28th to 30th, if there is no extension of the session, it seems to be impossible for the bill to pass. This special session of the National Assemble ends on 30th.

An argument of unconstitutionality of the bill has also pointed out. On his review report on the bill, Kim Moon-Hee, a member of the FEC, pointed out, ``The bill that is to be ruled by a Presidential decree without the maximum limit of the overdue interest rate for credit financial institutions has potential to be a violation of the constitution.``

For this reason, the MFE decided to consider a plan in which they decide the maximum limit of the overdue interest rate to be `several times of the lending rate`. A representative from the MFE said, ``We plan to prepare a complementary measure against the terms that may be unconstitutional. But, since the bill has been already put on the sub-committee, we expect that it will be passed during next National Assembly session.``

The BRFUP, presented to the National Assembly by the government, makes it clear that if a private money lender lends less than 30 million won to an individual or a small size business with less than 5 employees, the annual interest rate has to be less than 60 percent. And, if a private money lender charges more than 60 percent on interest rate, he/she can be imprisoned up to 3 years or fined up to 30 million won.

In addition, the bill includes substances in which private money lenders must be registered in the district city or province. And if a private money lender is sentenced to an imprisonment or heavier sanction, he/she cannot conduct business until five years after the end of the sentence.

Park Joong-Hyun sanjuck@donga.com