Extract from Current Issues in Consumer Law (1/2012)

Improvements in the consumer’s legal position in 2008-2011

A new Government Consumer Policy Programme is nearing completion. The priorities of the programming period 2008 – 2011 were ensuring a high level of consumer protection, promoting sustainable modes of consuming and production, enhancing the consumer’s role and safeguarding a functional and safe marketplace.

In 2008-2011, the Finnish Consumer Agency/Consumer Ombudsman focused on four focal areas outlined in the Government’s Consumer Policy Programme in their supervisory role: 

1. Communication services. Telephone and broadband are vital services for the consumer, and as such they must be particularly reliable. In her supervisory role, the Finnish Consumer Ombudsman has particularly focused on improving the consumer’s position in communication services. Progress has been made, for example in the context of contract terms of mobile telephone and internet subscriptions and order confirmations of mobile content services. 
    
2. Financial services. Financial services offered to the consumers have a strong impact on the consumer’s financial and legal position. The financial crisis, a powerful increase in card-based credits and quick loans marketed to consumers, banking services being increasingly provided online and emphasis on payment by cards rather than cash were prominent in 2008-2011.
    
3. A particular need for the protection of children. One objective of the Consumer Policy Programme 2008-2011 was improving the position of consumer groups requiring particular protection, including children and young people. Outdoor advertising, complying with the age limits of TV programmes also online and product placement are examples of themes that were targeted in this focal area.
    
4. Use of environmental claims in marketing. Over the last four-year period, the Finnish Consumer Ombudsman paid particular attention on the use of environmental claims in marketing as part of an action plan on sustainable consuming and production in the Consumer Policy Programme. In this focal area, the Finnish Consumer Agency examined a number of overly generalised or loosely worded environmental claims used in advertising, and created common rules together with such sectors as car sales. Extensive efforts to exert influence also aimed at promoting sustainable development in general.

The summaries in the following pages contain more information on the achievements and oversight in each focal area.

Lobbying and supervision continue

The activities and supervision of the Finnish Consumer Agency and the Consumer Ombudsman are influenced by inputs from a great number of different parties, and we have a versatile selection of tools at our disposal for managing these. In the focal area period 2008 – 2011, we also introduced the perspective of behavioural economics. In the forthcoming four-year period, we will strive to further modernise our selection of tools. The attached figure describes the dimensions of the supervisory task: Impulses and means (pdf).

Consumer protection in financial services is undergoing a period of change

In 2008-2011, the Finnish Consumer Agency and the Consumer Ombudsman secured and promoted consumer protection in the focal area of financial services, where the strong growth in the offer of card-based and quick loans, banking services increasingly moving to an online setting, and paying by cards instead of cash were part of the consumer’s everyday life.

Key issues in the focal area in 2008 - 2011:

• Card-based credit was marketed irresponsibly in form of unsolicited and unexpected offers of credit while the consumer was making other purchases, for example of household appliances and furniture.
   
• In order to eliminate these shortcomings, a checklist was prepared together with the Federation of Finnish Financial Services for use as a practical tool by those selling in-store credit. Consumer reports on inappropriate marketing of in-store credit have since almost completely stopped.
   
• Two guidelines for consumer protection were prepared in the context of quick loans: on the procedures to be followed in the remote selling of consumer credit and the basic rules of text message loans.
   
• A targeted seminar was arranged for actors in the field to introduce them to the policy on text message loans.
   
• A monitoring campaign in the quick loan sector was implemented together with the Data Protection Ombudsman. An extensive sweep on the websites of quick loan providers was also carried out later.
   
• Information was disseminated to all quick loan sector actors on collection methods and the related shortcomings. The number of complaints concerning the collection of quick loans later decreased.
   
• The working group on quick loans submitted a memorandum to the Ministry of Justice on needs to amend regulation on consumer credit required to ensure responsible lending.
   
• A few quick loan companies were brought to the Market Court. Some of the cases are still pending.
   
• The police were requested to investigate the highest quick loan costs in the market under the new provision on extortion. Pre-trial investigations in this matter remain unfinished.
   
• A number of proposals for comment were issued on financial services.
   
• The Finnish Consumer Agency lobbied to ensure that when passing the national payment services act, the possibilities of upholding a higher standard of national consumer protection enabled by the Directive would be taken up.
   
• The statements issued focused attention on the fact that online services should be introduced on a voluntary basis, providing an incentive for the consumers.
   
• Extensive lobbying to ensure that a bad credit record alone would not prevent a customer from obtaining a household insurance policy was productive: a new provision was added to the Insurance Contracts Act stating that the grounds for rejection must be given in writing, and that these grounds must be in compliance with legislation and good professional practice.
   
• The Finnish Consumer Ombudsman assisted a consumer and won the case in the Supreme Court in a matter that concerned ambiguously advertised costs of a savings policy.
   
• Three theme issues of the Current Issues in Consumer Law newsletter were produced on financial services.
   
• The financial crisis during the period under scrutiny did not have direct negative impacts on the everyday lives of consumers. On the contrary, it even had a positive effect as credit interest rates remained low.

Read more:
Instant Loan Companies Website Sweep (Press Release 12 Dec 2011)
Current Issues in Consumer Law 7/2010 (Theme Issue: Financial Services)