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S. Korea orders loan firms to correct unfair contracts

(Xinhua)
Updated: 2008-11-07 10:23

SEOUL -- The South Korean Fair Trade Commission (FTC) ordered a revision of unfair clauses in the contract of large loan companies in effort to protect consumers, the Korea Herald reported Friday.

The FTC announced that through investigation they found 141 unfair clauses in 28 lending companies' contracts such as clauses which permit the companies to change interest rates and sell off secured assets without clients' agreement.

The clauses which enable the loan company to transfer the debt to a third party without consulting the clients and to charge extra fees if the debt was paid before reaching maturity were also pointed out by the FTC.

The FTC added that it has found that 19 companies were using non-standard contracts while the other seven had been using standard contracts along with special contracts containing unfair clauses.

The better protect consumers in the future, the FTC said it plans to revise the standard contract for loan companies and draw up a standardized loan guarantee contract.