Seoul: South Korea's fair trade watchdog said Monday it issued an administrative notice of proposed revisions to consumer protection guidelines for prepaid installment transactions, aimed at strengthening transparency in operators' management of customers' advance payments.

According to Yonhap News Agency, the Fair Trade Commission (FTC) announced that the proposed revisions would necessitate operators to set up internal guidelines for managing advance payments. Additionally, they would be required to devise a management plan for each fiscal year to maintain transparency and accountability.

In South Korea, prepaid installment contracts are a common practice among funeral and travel service providers, where customers pay in advance for services to be delivered at a future date. The proposed guidelines aim to address the management of these advance payments by requiring operators to maintain a balance between stability, liquidity, and profitability. This would ensure that there are sufficient funds available to deliver the contracted services and process cancellation refunds.

Furthermore, the guidelines would obligate operators to conduct comprehensive reviews prior to investing in high-risk assets, such as derivatives, to safeguard consumer interests. Additionally, those holding advance payments amounting to 100 billion won (approximately US$72.1 million) or more would need to establish a management review committee to oversee their financial practices and decisions.