28 November 2016
Aktia Bank, Danske Bank, Nordea, OP Financial Group, POP Bank Alliance, Handelsbanken, Savings Banks´ Union Coop and Bank of Åland have given the Finnish Competition and Consumer Authority (FCCA) commitments to restrict the banks´ right to increase charges and fees for customer credit.
The banks operating in Finland have collaborated with the Federation of Finnish Financial Services regarding standard terms and conditions resulting in general loan terms and conditions concerning consumer credit lending. These terms and conditions have included a model term and condition according to which a bank may increase charges and fees for consumer credit on account of increased costs or for other justified reasons. The banks have incorporated the term in question in their consumer credit agreements.
The Competition Act presupposes that every company decides independently on its competitive behaviour. Standard terms and conditions established jointly by companies that are in competition with one another are anti-competitive if they are conducive to standardising companies´ competitive behaviour. Adopting joint standard terms and conditions may increase companies´ marketing power compared with a situation in which each company decides independently on the content and application of terms and conditions. Standard terms and conditions restrict competition if they are intended to improve companies´ profitability at the expense of consumers or other enterprises, for example, by jointly transferring the risk inherent in business to customers.
Commitment decision solves competition problem and improves position of consumers
In May 2015, the FCCA suggested as its initial assessment that the model term and condition has given the banks wide-ranging rights to adjust charges and fees for consumer credit during the contract period. According to the Authority´s preliminary assessment, the model term and condition has been conducive to eliminating uncertainty about the grounds for pricing adjustments concerning competitors´ fees and charges. According to the FCCA, the aim of the model term and condition has been to transfer the risk associated with rising price levels and increasing costs from the banks to consumers.
Aktia Bank plc, Danske Bank Plc, Nordea Bank Finland Plc, OP Financial Group, POP Bank Alliance Coop, Svenska Handelsbanken AB (publ), Branch Operation in Finland, Savings Banks' Union Coop and Bank of Åland Plc, which participated in collaboration on standard terms and conditions in 2011, have given the FCCA commitments to no longer apply the model term and condition. The banks will replace the model term and condition with a new term restricting the banks´ right to adjust charges and fees for existing consumer credit agreements. Changes in charges and fees pursuant to the new term and condition will be possible only due to a decision or provision of the relevant authority or on the basis of an amendment to the legislation. The increases may not exceed the actual costs incurred by the banks. Equivalent restrictions will be applied also to new consumer credit agreements concluded over the next three years.
The Consumer Ombudsman has assessed the new term and condition from the perspective that it is also in line with consumer protection legislation.
Further information: For further information, please contact Martina Castrén, Senior Research Officer, on +358 29 505 3325 and Kirsi Leivo, Director, on +358 29 505 3351.
Read more: Assessment of collaboration on standard terms and conditions in competition law