11 January 2017
Consumer Ombudsman’s Newsletter 6/2016 is a financial services theme issue. It includes Finnish Consumer Ombudsman’s decisions on credits and paying, and shares news on law amendments affecting consumers in house loan markets, online banking services and consumer credits.
Consumer Ombudsman’s Newsletter 6/2016 includes following topics:
- Editorial: Curbing loan costs. The payday loan market has been characterised by the fact that consumers increasingly pay exceptionally and unreasonably large credit costs even for large loans. Those struggling with debt problems also pay unreasonably large penalties for payment delays. During 2016 the Consumer Ombudsman assisted several individual consumers in court. Counterparties were practically all of the major companies offering payday loans in Finland. As securing consumers’ rights appears difficult through case law, urgent measures are requested of lawmakers, argues Consumer Ombudsman Päivi Hentunen in her editorial.
- TV advertisements for car loans revealed deficiencies. The TV ads for car loans of several creditors and credit intermediaries failed to present some of the information required by the law in a clear and visible manner. For example, advertisements gave high visibility to a 1% interest on loans and failed to present other relevant information. Consumer Ombudsman finds that the creditor is always responsible for the advertisement of the credits. (Companies: Auto-Bon Oy, Santander Consumer Finance Oy, Nordea Rahoitus Suomi Oy, Jarmo Rinta-Jouppi Oy, Forso Finance Oy/Ford Credit Toyota Finance, Toyota Auto, General Motors Finland Oy, LänsiAuto Oy, OP Yrityspankki, Danske Finance Oy).
- The Consumer Ombudsman instructed creditors. When calculating the real annual interest, the withdrawal fee must not be calculated in the total amount of the credit, but it must be taken into account as part of the cost of the credit. In her rulings, the Consumer Ombudsman has also noted that creditworthiness must be assessed with care, and that a credit limit cannot be unilaterally raised by the creditor.
- Guidance for travel agents on payment surcharges. Drip-pricing in the marketing and sale of flights in particular has been previously raised as an unwanted and unlawful phenomenon. Now, the Consumer Ombudsman also wants to draw the attention of travel agents to the use of payment surcharges. The advertised total price of a flight must always include at least one commonly used payment method free of charge.
- Reforms to the legislation governing housing loans. The legislation governing housing loans and consumer credits has been amended, with the amendments taking effect on 1 January 2017. The Consumer Protection Act has been amended with provisions regarding consumer credits related to residential immovable property. The legislative reform clarifies prerequisites for changing the interest and payments of a credit, prohibits tying practices in connection with offering loans, and obligates companies offering peer-to-peer loans to register.
- Proposal by Consumer Ombudsman for amending the legislation. In autumn 2016, the Consumer Ombudsman submitted a motion to the Ministry of Justice, proposing that an interest rate ceiling be urgently extended to cover all consumer credits in order to address the problems present in the payday loan market. The Consumer Ombudsman also supports bringing credits subject to no interest or cost under the scope of the provisions of the Consumer Protection Act and using the income information register in the assessment of creditworthiness.
- Expert Article: Changes to payment practices. In addition to credits, issues related to payment have played a major role in the work of the Consumer Ombudsman for several years. Consumer protection in payment is related both to issues between the consumer and the company receiving a payment and to the offering of payment services to consumers. Legal Adviser Paula Hannula brings you an update on financial services and consumer protection.
You can find the previous Consumer Ombudsman’s newsletters of 2016 in the archive.