4 Jan 2019
A new approach was taken to resolving issues related to instant loans in Finland in 2018. Providers of instant loans are aware of the new stricter laws that are due to be introduced and consequently marketed their services aggressively to test the boundaries all through the autumn. Credit advertisements typically try to sell an image of the bliss of consumerism while ignoring the actual – often unreasonably high – cost of the credit to the consumer, writes Consumer Ombudsman Katri Väänänen in newsletter’s editorial.
Finnish Consumer Ombudsman’s Newsletter 6/2018 is a financial services theme isuue. It includes the followig topics, for example:
- Recurrent deficiencies in consumer credit marketing. The Consumer Ombudsman has found numerous non-compliances in Ferratum Finland Oy's marketing of "Joustava" consumer credit product both on the company’s website, in email marketing and television advertisements. The advertisements put emphasis on specific facts about the credit – such as the loan amount or an interest-free first month – but fail to mention other information required under the Consumer Protection Act, such as the the annual percentage rate of charge. The Consumer Ombudsman also notified Komplett Bank ASA concerning image marketing earlier in 2018, and there are still numerous other open cases involving credit marketing by various lenders.
- A cap on credit costs is not enough on its own. The Finnish Government is proposing to extend the cap on credit interest rates to all credits that are subject to the consumer credit provisions of the Consumer Protection Act. The reform aimes at making the costs associated with consumer credit more reasonable and at reducing indebtedness resulting from consumer credit agreements. Contrary to the current cap, which is based on the annual percentage rate of charge of loans, the new law would cap the interest that can be charged on a loan, and to curb lenders’ right to charge consumers for other costs associated with their loans. The Consumer Ombudsman does not agree with the proposal to not apply the new regulations to existing credit agreements.
- Demand the adjustment of unreasonable credit costs. The Consumer Ombudsman is urging consumers to demand the adjustment of unreasonable credit costs. The Consumer Ombudsman has represented consumers in a number of debt collection cases involving instant loans in which a court has not made the loan costs more reasonable despite the consumer’s express request. The Consumer Ombudsman has also sought preliminary rulings on what can be deemed reasonable.
- Supervision campaign of payment surcharges in online marketplaces. The Consumer Ombudsman checked hundreds of online stores in the summer of 2018 in order to find out whether consumers were charged extra for using the most common methods of payment, such as Visa and Mastercard. Payment surcharges on the most common methods of payment have been forbidden since 13 January 2018. The majority of businesses have changed their practices to comply with the new regulations.
- Leave to appeal to the Supreme Court in a case involving instant loans. At the end of 2017, the Market Court imposed injunctions for unfair contract terms to the instant loan provider 4finance Oy that were less severe than the ones sought by the Consumer Ombudsman, and the Consumer Ombudsman consequently appealed to the Supreme Court. The Supreme Court gave the Consumer Ombudsman leave to appeal at least about fees charged for postponing repayment in October 2018.
- Katri Väänänen’s interview: Enforcement arsenal strengthens in the 2020s.Until the introduction of the new enforcement measures, promised to European consumer protection authorities by the new CPC Regulation in just over a year’s time, the Consumer Ombudsman Katri Väänänen relies on negotiations, court proceedings, the possibility of class action and the publicity to correct practices that are in violation of Consumer Protection Act. All of Finland’s Consumer Ombudsmen have been interviewed in our newsletter this year in honour of the institution’s 40th anniversary.
You can find the previous newslettersin the archive.
The next issue of Finnish Consumer Ombudsman's Newsletter 1/2019 will be published (in English) in February/March 2019.