Amendments to the Consumer Protection Act concerning consumer credits and online payments will enter into force on 1 October 2023. The amendments impose obligations on businesses offering consumer credits and traders engaged in online sales.
The reform of the Consumer Protection Act lowers the interest rate cap on credits and intervenes in the inappropriate marketing of credits by specifying marketing methods that are considered unlawful. In addition, the Act obliges traders to present payment methods in a certain order online and to verify customers’ identity more frequently than before.
Lowered interest rate cap on consumer credit
From October onwards, interest rate on credit may not be agreed to be higher than the reference rate laid down in the Interest Act plus 15 percentage points. The reference rate under the Interest Act is currently 4%.
The absolute upper limit of credit interest rate remains at 20%. Lenders must prepare their contractual terms so that the credit interest rate cannot exceed the interest rate cap when the reference rate rises.
The Act also applies to new withdrawals from credit agreements concerning continuous credit concluded before 1 October 2023. If a consumer makes a new withdrawal from a continuous credit concluded before the Act entered into force, the interest rate cap provision of the new Act will apply to the withdrawal.
The aim of the legislative reform is to prevent consumers’ over-indebtedness and to make the pricing of credits more reasonable.
Learn more about the changes from the Consumer Ombudsman’s guidelines on Offering consumer loans (in Finnish and Swedish).
Specified requirements concerning the marketing of consumer credits
From now on, the Consumer Protection Act will include a more detailed list of unlawful marketing methods. Methods that are specifically contrary to good lending practice include downplaying the seriousness of taking out credit, reminding consumers of unused credit and directing the marketing of credits to consumers who use gambling services or have bad credit records.
It is also prohibited to advertise credit on terms under which the credit costs of one-time credits may exceed the amount of the principal of the credit or, in the case of continuous credit, the amount of credit drawn by the consumer.
The aim of the legislative reform is to control the inappropriate marketing of credits.
Learn more about the changes from the Consumer Ombudsman’s guidelines on Offering consumer loans (in Finnish and Swedish).
Payment methods must be presented in a specific order
From now on, payment methods must be presented in a certain order to consumers making online purchases. The provision on presenting payment methods includes prohibitions on presenting credit or other deferred payment as the primary payment method. No payment method may be presented to consumers as the default method.
The reform aims to prevent payment deferrals from being offered to consumers as the primary payment method and to guide consumers towards more awareness of their payment choices.
Read more in the instructions on the Obligation to provide information in online stores.
Expanded obligation to verify identity
From now on, it will be mandatory to also verify consumers’ identity in connection with commodity-related credits. Identity verification is now required when increasing the amount of credit or the credit limit as well as when concluding a credit agreement.
Identity verification is also required when a consumer chooses a payment method online involving deferred payment, such as an invoice or instalment payment. However, there is no obligation to verify a consumer’s identity in some situations, for example with an agreement that the consumer pays the purchase price when the goods are handed over.
The legislative amendments aim to prevent abuse related to taking out credit and making online payments.
Learn more about the changes from the Consumer Ombudsman’s guidelines on Offering consumer loans (in Finnish and Swedish).