Fair Trade Commission: "Cooperative Insurance Business to Develop Measures Ensuring 'Soundness Maintenance and Consumer Protection'"

'Measures to Enhance the Vitality of Consumer Life Cooperatives'

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission (FTC) has decided to review institutional and personnel improvements, including the Consumer Cooperative Act, to maintain the soundness of consumer cooperative insurance businesses and protect consumers, and to prepare feasible measures based on this.

On the 30th, the FTC held a meeting with representatives from five consumer cooperative federations at the Fair Trade Mediation Agency and announced the "Measures to Revitalize Consumer Cooperatives," which includes these contents.

Consumer cooperatives are a type of cooperative voluntarily organized by consumers to improve their welfare based on the spirit of mutual aid. In South Korea, they have grown through private initiatives since the 1980s. Recently, with increasing interest in social values, consumer cooperatives focusing on food safety, eco-friendliness, and urban-rural exchange have been re-evaluated. However, due to environmental changes such as market stagnation, there has been a need to seek new growth engines and expand the social role of consumer cooperatives. Accordingly, the FTC established four major strategies (30 detailed tasks) in cooperation with consumer cooperatives, aiming to "revitalize consumer cooperatives for the realization of an innovative inclusive nation."

The legal amendment allowing consumer cooperatives to operate insurance businesses was made in 2010. However, for actual business operations, the FTC must establish subordinate regulations. This is because insurance businesses require setting insurance regulations and obtaining FTC approval.

Therefore, the FTC plans to review institutional improvements such as the Consumer Cooperative Act to maintain the soundness of consumer cooperative insurance businesses and protect consumers, and to prepare concrete and feasible alternatives based on this. Through expert participation, they will examine similar domestic laws and overseas cases such as Japan's Consumer Cooperative Act to develop entry requirements, internal and external controls, dispute mediation, consultation with financial authorities, and plans for securing organizations and personnel for management and supervision.

Additionally, to maximize the participation opportunities of member cooperatives in federations, the FTC will consider expanding the maximum number of executives currently limited to 20 under the Consumer Cooperative Act to 30. They will also review changing the current regulation that "principally prohibits" non-members from using cooperative business services to "principally allow" it, to activate the sales and promotion of cooperative products. Furthermore, they will consider increasing the allowable usage ratio of cooperative goods by non-members, currently limited to 10% of total supply (sales), to 20%. Moreover, to facilitate consumer cooperatives in expanding their equity capital, the FTC plans to permit the conversion of dividends into equity and revolving equity contributions.

To promote joint marketing and research and development among consumer cooperatives and their related organizations (consumer cooperative subsidiaries), the FTC will introduce the cooperative joint business corporation system, which has already been adopted in the Agricultural Cooperative Act and the Fisheries Cooperative Act.

The FTC will also relax related regulations to enable consumer cooperatives to more easily form representative organizations. To this end, the establishment requirements for national federations will be eased from the current law's "consent of more than half of all cooperatives" to "consent of more than half of cooperatives by type."

Kim Jae-shin, Vice Chairman of the FTC, who presided over the meeting, said, "The FTC will consistently promote legislative tasks included in the measures through communication with consumer cooperatives," adding, "We expect that these measures will improve the consumption life of consumer cooperative members and establish a virtuous cycle structure where social values are enhanced through various activities of consumer cooperatives."

This content was produced with the assistance of AI translation services.