In accordance with the Consumer Ombudsman’s demand, the Market Court has ordered the finance company Blue Finance Suomi to cease the unlawful pricing of consumer credit on pain of a fine of €100,000. In February 2022, the Consumer Ombudsman took the company to the Market Court for violating credit price regulation.
Blue Finance Suomi has offered consumers more expensive loans than permitted by law by charging separate fees for paper invoicing, expedited processing of credit applications and for a so-called pikanostopalvelu (‘rapid withdrawal service’) and hetinostopalvelu (‘immediate withdrawal service’). According to the Market Court, these payments are credit costs, the maximum amount of which is set in legislation.
Blue Finance Suomi’s pricing model has resulted in the company breaching the legislative credit cost cap. As a result, a consumer who has concluded a credit agreement is not obliged to pay any credit costs. This also applies retroactively: if a consumer has already paid credit costs, these payments must be deducted from the principal of the credit and the consumer is entitled to a refund of their payments exceeding the principal of the credit.
There have been plenty of problems in complying with credit cost regulation, and the Consumer Ombudsman has investigated them with several finance companies. Blue Finance Suomi is the first case that has been taken to the Market Court.
“Credit costs may not be increased by disguising basic components of the credit relationship as ancillary services on which an additional fee exceeding the legislative credit cost cap could be charged. The Market Court’s decision is an important policy statement that should be internalised by the actors in the sector.”
The Consumer Ombudsman has also called for a legislative reform so that, in addition to the prohibition imposed on the company, the Market Court could also order reimbursements to be paid to consumers.
“Of course, we expect the company to reimburse all its customers for the credit costs it has charged unlawfully, as it is explicitly required by law. In cases such as this, however, it would be appropriate for the Market Court to be able to resolve consumer reimbursements in the same process.”
Price regulation sets maximum level for credit costs
According to the credit cost regulation, which took effect in September 2019, annual interest charged on the unpaid principal of a credit must not exceed 20 per cent. In addition, the daily amount of other credit costs must not exceed 0.01 per cent of the principal of the original credit or credit limit. Also, the yearly amount of the said other credit costs must never exceed €150.
All costs that are known to the lender and that stem from the credit relationship are included in the credit costs. For example, fees for applying for credit or making a drawdown as well as charges for sending payment details to the consumer are credit costs regardless of the amount of time and the method used to accomplish the action. Only the fees charged for completely optional ancillary services are excluded from the credit costs. In such a situation, the credit must be offered under the same conditions, regardless of whether the consumer enters into an agreement for an ancillary service in connection with the credit agreement. An ancillary service agreement cannot be concluded with the consumer about the basic components of the credit relationship as they must be agreed upon in the credit agreement itself.