Before granting credit, a creditor must evaluate whether a consumer applying for credit will be able to repay the debt. If the creditor uses outside services in this evaluation, these services must not cause harm to the consumer.
The Consumer Ombudsman has examined the types of procedures the credit industry has in place for granting credit. On the basis of this review, the Consumer Ombudsman has issued a reminder to the entire industry of the rules and regulations related to granting credit.
According to the Consumer Protection Act, a creditor must evaluate a consumer’s ability to fulfil repayment obligations. As of 1 June 2013, creditors have also been required to evaluate a consumer’s creditworthiness more thoroughly in instances of smaller debts.
In order to evaluate creditworthiness, the creditor must attain a sufficient amount of information on the consumer’s income, expenses, debts, assets and possible guarantor responsibilities. Additionally, using reasonable measures the creditor must aim to ensure that the information submitted by the applicant is correct. A credit applicant’s own notice of regular income alone is not sufficient proof. Depending on the circumstances, the applicant must be asked to submit wage and pension certificates.
Over the course of this year, the Consumer Ombudsman will monitor the credit industry to ensure that it complies with the provisions related to granting credit and, when necessary, intervene in violations.
The Consumer Ombudsman has highlighted outside services used in evaluation of creditworthiness in its reminder to creditors. These services may not cause harm to the consumer. This can occur, for example, if a consumer is required to relinquish his/her internet banking codes to an outside service for the purposes of the evaluation. This is in violation of the terms and conditions related to internet banking codes, as well as provisions of the Payment Services Act.
A consumer should also independently view the instructions his/her bank has on the secure use of internet banking codes and find out which services can be safely used with the codes.
Enforcement campaign reveals shortcomings in marketing of consumer credit (FCCA press release 30/05/2013)
Key reforms in collection and instant loan legislation (Finnish Consumer Ombudsman’s Newsletter 1/2013)
Consumer credit in marketing of goods and services (in finnish) (Consumer Ombudsman Guidelines)