On Feb. 13^th, the Consumer Dispute Arbitration Committee (Chairman: Hak-geun Kim) made a mediation decision that banks should return expenses for putting up security as collateral for a loan, which were imposed on consumers by banks, back to consumers.

All seven cases were requested for mediation, which are 1) Consumers were forced to cover all the expenses for putting up mortgage and stamp duty (four cases); 2) While banks bear expenses for putting up mortgage, they impose a 0.2% of added rate and stamp duty on consumers (one case); and 3) While banks bear expenses for putting up mortgage, they impose stamp duty and penalties for interim repayment (two cases).

And, the CDSC made a decision for a full return (except the expense for purchasing housing bond) of the expenses for putting up collateral security or interest with added rate, which was imposed instead of the expense for putting up mortgage and a 50% return of stamp duty. 

※ Yet, the penalties for interim repayment are excluded from the refund, as they are not necessarily unfair profits.   

The mediation decision takes its significance in that this is the first case to determine a return of expenses for putting up mortgage since the Supreme Court’s ruling regarding extra expenses related to loan. The Supreme Court once ruled that it was fair for the Korea Fair Trade Commission to advise banks to use the Revised Standard Clauses instead of using the formal Clauses, under which banks imposed extra expenses related to loan on consumers.  

The Mediation Decision has the same force as a judicial compromise, unless there is rejection of banks within 15 days of receiving the notice. 

If the dispute fails to be agreed due to the refusal of the banks, the KCA plans to help the consumers file a lawsuit. Also, if consumers, who are identically damaged, make requests for consumer redress to the KCA by March 23, 2012, they could benefit from lawsuit support at the same time.