Support for proposal but higher cost a concern

Complaints were lodged with Case by couples who were left in the lurch after Sophia Wedding Collection shut down abruptly recently.
Complaints were lodged with Case by couples who were left in the lurch after Sophia Wedding Collection shut down abruptly recently.ST PHOTO: YEO KAI WEN

Higher operating costs and the danger of smaller outfits being sidelined were among early concerns expressed by the industry, if the proposed move to tweak laws to protect consumers who make prepayments does happen.

They were generally supportive of the consumer protection moves, and said firms could buy insurance to protect consumers' prepayments or join a plan where prepayments are held in trust by parties like EZ-Link.

But such moves are costly, said Spa Association Singapore president Nancy Lim. Most of the association's 50 members do not offer such protection schemes. "The cost of buying insurance will be passed down to the consumer in the end, so they will suffer," said Ms Lim, adding that smaller firms may decide not to sell packages altogether. She said small firms may also struggle to find an insurer.

The Consumers Association of Singapore (Case) had proposed early this year to legislate the requirement to protect prepayments. The Ministry of Trade and Industry said it is considering the matter.

A Straits Times check found that Case-accredited spas with insurance for prepayments are charged a percentage of each package sold - 1.75 per cent to 2.25 per cent, depending on the amount insured.

Orchard Road Business Association executive director Steven Goh said the proposed move is good for the reputation of the prepayment industry but exceptions could be made for start-ups with no track records.

Mr Chan Chong Beng, chairman of the Workforce Advancement Federation, which helps smaller firms, said it would clean up the industry. But he added that the move would give larger companies an advantage as they tend to have fewer cashflow problems.

Case figures show that 46 firms shut down abruptly from January to September. This month, Sophia Wedding Collection did so, leaving 76 couples with wedding packages stranded.

Businessman Sem Abdul Aleem, 64, applauded the move. He paid $5,700 to renovate his daughter's room last year. The contractor tore down the walls, then vanished.

But sales executive Amutha Kumaran, 44, is not for the move. "We want to buy a package to save money. So if I have to pay more for insurance, then what's the point?" she asked.

Jessica Lim

A version of this article appeared in the print edition of The Straits Times on October 21, 2015, with the headline 'Support for proposal but higher cost a concern'. Subscribe