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FINLAND – Our ECRC partner in Finland has undergone a merger with the Competition authorities. We hope that it will be able to continue its excellent work for consumers (nationally and internationally). The latest edition of the “Current Issues in Consumer Law” Version 1/2013 reports on a number of noteworthy developments.
The Finnish Competition and Consumer Authority (FCCA or KKV (Kilpailu- ja kuluttajavirasto) began operations on 1 January 2013. The agency was created by joining the Finnish Competition Authority and the Finnish Consumer Agency. The new agency increases the societal significance of competition and consumer issues and improves administration efficiency. The legally mandated responsibilities of the joined agencies remain unchanged in the new agency. The responsibilities of the Finnish Competition and Consumer Authority relate to implementing competition and consumer policy, ensuring good market performance, implementing competition legislation and EU competition rules, and securing the financial and legal position of the consumer. The agency also handles the supervision responsibilities of the Consumer Ombudsman.


Below is their latest journal.
See also recent news in English
14/03/2013
Amended Debt Collection Act improves consumer position


Extracts from the Current Issues in Consumer Law 1/2013

20/03/2013

Work for the good of consumers continues
We have now been operating under a new organisation - The Finnish Competition and Consumer Authority - since the beginning of 2013. The Consumer Ombudsman is responsible for supervising consumer affairs and, correspondingly, competition supervision...

Customers reimbursed for overcharging
The Finnish Consumer Ombudsman has concluded a case involving an insurance provider's investment-linked pension insurance. The case has been in court for a long period of time. Over 4,400 customers were reimbursed for administrative costs, which had...

All headlines (see link below to full journal):

EDITORIAL
Work for the good of consumers continues
Customers reimbursed for overcharging
Consumers must be able to trust marketing claims
Compensation for flight delays also retroactively
Credit marketing still has room for improvement
.....
Key reforms in collection and instant loan legislation
Guidelines for the marketing of financial services



EDITORIAL
Work for the good of consumers continues

We have now been operating under a new organisation - The Finnish Competition and Consumer Authority - since the beginning of 2013. The Consumer Ombudsman is responsible for supervising consumer affairs and, correspondingly, competition supervision will be handled within its own purview. Although synergy benefits will be sought, operating approaches fine-tuned and working cultures integrated, supervision responsibilities will continue to focus on their own, respective areas. Indeed, over time expertise will expand to take broader entities into consideration from a market functionality standpoint, in both supervision sectors.

The Consumer Ombudsman is responsible for tackling problems on the market that affect large numbers of consumers. The position of consumers on financial markets and as users of communications services has been identified as a problem area in the consumer policy programme. The need for consumer protection, legislative influence and consumer information can also be seen in consumer enquiries made, thus affecting the orientation of our operations.

Our focus on financial services will remain a key area, with two applicable legislative reforms soon entering into force this year. We expect these reforms to have a significant impact on the lives of consumers. Instant credit legislation and amendments to the Debt Collection Act have been ratified in Parliament. The moderation of the interest ceiling on instant credit and debt collection fees will bring relief to the financial suffering of many consumers, which has been frequently reported on in the news through the winter, as the economic outlook remains bleak.

In digital environments and communications technologies, the world is still changing at an astonishing rate. We are participating in and closely monitoring the Ministry of Transport and Communications Information Society Code project, which is based on a Government programme. The purpose of the project is to compile legislation related to a single topic.

One way of influencing the consumer's position is to seek precedents through legal channels, which is something we will continue to do in the future. The most recent example of this is a ruling issued by the Finnish Supreme Court in January 2013 to prohibit the fastening of advertising notes on the front doors and letterboxes of consumers, in violation of good practices.

Our supervision also focuses on so-called weak consumer groups. Later this spring, we will be publishing a theme issue of our online newsletter that will examine one of these groups, i.e. the marketing and terms of agreement aimed at children and youths. We will also be publishing theme issues on the above-mentioned financial and communications services during the year.

There are also things happening on the international front. Nordic Consumer Ombudsmen meet regularly twice a year. Supervision co-operation is planned and implemented at the EU level in the form of Consumer Protection Co-operation (CPC), and at a broader level in the International Consumer Protection and Enforcement Network (ICPEN) and the Organisation for Economic Co-operation and Development (OECD).

With the merging of authorities, Current Issues in Consumer Law will continue to focus purely on matters falling within the purview of the Consumer Ombudsman.

Päivi Hentunen

Consumer Ombudsman

www.kkv.fi/en-GB/ (Our official website)
Supreme Court forbids the fastening of advertisements on front doors and letterboxes. Finnish Competition and Consumer Authority Press release (31 Jan 2013).

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Customers reimbursed for overcharging

The Finnish Consumer Ombudsman has concluded a case involving an insurance provider's investment-linked pension insurance. The case has been in court for a long period of time. Over 4,400 customers were reimbursed for administrative costs, which had not been explained to them clearly enough in the marketing of the insurance.

Insurance provider Skandia Life charged a 1% administrative fee from savings earned on its unit-linked private pension insurance. The significance of the fee was misrepresented in an offer included with the insurance marketing.

The fee for administrative costs has a considerable impact on the pension savings of its customers. Depending on the amount of contributions, the saving period and value of investments, the fee could reduce the customer's accumulated savings by as much as tens of thousands of euros.

Long process concluded

The Finnish Insurance Complaints Board first addressed the matter in 2005, recommending that the company cease charging the administrative fee. However, the company did not comply with the Board recommendation. The Consumer Ombudsman felt that it was important for the court to set a precedent in the matter, assisting one client in bringing the case before the District Court in 2006. The District Court and then the Court of Appeal ruled that the company did not have the right to charge a 1% administrative fee, because the calculations in the offer would have misled the customer regarding the cost.

The case was brought before the Finnish Supreme Court, which confirmed in 2010 that the individual offer had been misleading and, therefore, no administrative fee could be charged. The company was ordered to repay the already collected fees to the customer's insurance policy.

Following the ruling, the Consumer Ombudsman entered into negotiations with Skandia Life on how the ruling would also be applied to its other policyholders in similar positions. The result of the negotiations was that the company would repay all policyholders who had received the offer specified in the Supreme Court ruling in connection with the sale of the policy and submit a copy of the offer to the company.

Considerable total reimbursement to consumers

The company sent a letter concerning the matter to all investment-linked pension insurance policyholders, of which there are tens of thousands. This ensured that all policyholders entitled to the reimbursement would also be given the opportunity to apply for it. Not all policyholders were presented with an offer in marketing. Based on the Supreme Court ruling, the company limited the entitlement to reimbursement to those who can present the offer given.

The company has processed the reimbursement applications it received and notified the Consumer Ombudsman that it has reimbursed the fees collected to the insurance policies of over 4,400 policyholders. The company is also paying a penalty interest for late payments. The Consumer Ombudsman is satisfied with the end result.

Customers reimbursed for an administrative fee overcharged by Skandia Life . Finnish Competition and Consumer Authority Press release (8 Feb 2013).

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Credit marketing still has room for improvement

The Finnish Consumer Ombudsman has investigated the marketing practices of several credit companies. The companies did not, for example, specify the actual annual percentage rate or other information required under the Consumer Protection Act, in accordance with good practices. In addition to this, essential information was only found in the fine print.

Information presented in consumer credit advertising is regulated by the Consumer Protection Act. The consumer must be provided with sufficient information, which can be used to help them assess whether the credit is suitable for their own needs. Credit companies must also act responsibly and take the consumer's interests into consideration.

The law stipulates that consumer credit advertising must state the actual annual percentage rate of the credit being offered whenever an advertisement includes the percentage rate, other figures indicating credit fees or any other information concerning the terms of the credit agreement. Advertising must also state the credit percentage rate and other credit fees, the amount of credit, duration of the credit agreement, the combined total of the credit amount and credit fees, and the number of payment instalments.

This information must correspond precisely with the credit company's standard terms of credit. Simply mentioning that all this information can be found on the credit company website is unacceptable – this information must be clearly stated in the advertising. 

First-time loan is not a separate credit product

Radio advertisements for 4finance Oy's Vivus instant loans lure consumers by offering a free first-time loan: "A first-time loan of up to 400 euros a month. The first loan without fees or interest. This loan is intended for persons over 20 years of age with a good credit history."

According to the Consumer Ombudsman, a first-time loan cannot be considered a separate credit product offered by the credit provider, nor can the terms of the offer applying to new customers—no interest and no fees—be considered a standard term of credit to be offered by the credit provider.

When an advertising campaign states, for example, information concerning a credit amount or credit limit, this information is considered by law to be a term of a credit agreement. Consequently, the advertisement should have also stated all other information concerning credit as specified by the Consumer Protection Act. The advertisement would then be in compliance with the Act. 

Font size matters

Santander Consumer Finance Oy advertised a credit product on, for example, television. The advertisement voiceover said: "Take out a Santander loan from two to twenty thousand euros, with monthly payments that are just right for you. You'll get a one percent discount off your annual percentage rate."

Displayed in large characters on the screen was "Interest discount -1%", among other text. At the bottom of the screen, in very small print, read the following: "In accordance with the Consumer Protection Act, the actual annual percentage rate on a 20,000 € loan for a 10-year loan is 11.03% (3-month Euribor (365) 0.66 €) 2 July 2012.” The television advertisement was approximately 15 seconds in length.

The television advertisement stated, among other things, the amount and price of the credit, which is considered information concerning the terms of the credit agreement. As a result, the advertisement must also legibly and clearly present all other information required by the Consumer Protection Act in such a way that it can be easily seen and read.

The Consumer Ombudsman found that the actual annual percentage rate was presented using an example at the bottom of the screen in such a small font size, that consumers would not be able to easily see and read the information in question. Consequently, the Consumer Ombudsman deemed the credit advertisement to be in violation of the Consumer Protection Act.

On the whole, the Consumer Ombudsman felt that the information concerning the 1% interest discount unduly dominated the consumer credit television advertisement, taking into consideration that the length of the advertisement and advertised product (i.e. credit) was not specified and the credit information required by the Consumer Protection Act was not specified in a clear or easily discernible manner. The credit marketing was in violation of responsible and good credit practices. 

Carefree loan?  

The Finnish affiliate of BIGBANK AS advertised credit on its website as follows: "Take out a holiday loan now and get more out of your summer. Carefree summer holiday", "Loans up to 10,000 euros" and "Loans for 6–72 months". Street-side advertisements used, for example, the following text: "Take out a holiday loan and get more out of summer!", "up to 10,000 euros" and "Now you can sign a loan agreement online". The image of a sunny beach was used as the background for both online and street-side advertisements.

In the street-side advertisements under review, information concerning the amount of credit was presented, while online advertisements presented information on the amount of credit and the loan period, both of which are considered the terms of a credit agreement under the Consumer Protection Act. However, the advertisements failed to mention, for example, the actual annual percentage rate and other credit fees as well as the combined total of these and the credit itself. The advertisements were therefore in violation of the Consumer Protection Act.

The marketing of credit as a risk-free or "carefree" solution to consumer financial problems is in violation of good credit practices. The Consumer Ombudsman felt that the message of the advertisements combined with the beach images were problematic. The advertising used this to emphasise the carefree nature of taking out a loan, presenting credit in a very enticing light. As the advertisements also lacked the information required by the Consumer Protection Act, the advertising, on the whole, clearly compromised the consumer's ability to give careful consideration to taking out a loan and was therefore in violation of responsible and good credit practices. 

Factual claims in advertising must be provable  

In another 4finance Vivus radio advertisement, the following claim was made, stating that the credit product was the most affordable available: "The most responsible and affordable instant loans. This loan is intended for persons over 20 years of age with a good credit history."

The claim stating that the instant loan is the most affordable available is a factual claim, which must be provable by means of, for example, a comprehensive price comparison. The claim must be based on impartial and reliable reports, studies, statistics, tests or, for example, measurements. The veracity of the claim must be confirmed before it can be made and the claim must be factually accurate before any marketing is made public. The company has announced that it will only generally refer to the affordability of credit instead of claiming to be the most affordable.

All companies are committed to changing their marketing practices in the manner specified by the Consumer Ombudsman. 

Instant loans marketed to the young as a way to good life . Current Issues in Consumer Law (5/2012).
Marketing credits with inadequate information . Current Issues in Consumer Law (5/2012).

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Key reforms in collection and instant loan legislation

The Finnish Consumer Ombudsman has been closely involved in the reform of collection and instant loan legislation. The Debt Collection Act, which entered into force in March 2013, contains an important new regulation. Under the new Act, debtors may be charged collection fees for no more than two demands for payment in the collection of consumer debts. An interest ceiling on instant loan is also expected.

The legislative reform concerning debt collection addresses the charging of unreasonable high collection fees. Under the new Act, the maximum amount of collection fees on consumer debts will be lowered, especially for small debts of no more than 100 euros, in which the debtor's total fee liability may be no higher than 60 euros. Fees on debts of no more than 1,000 euros may be no higher than 120 euros.

The Government proposal to amend the Debt Collection Act contains the finding that the total amount of collection fees is mostly affected by payment reminders and demands for payment. In a National Research Institute of Legal Policy study on collections fees, it was also found as early as 2009 that two fee-based demands for payment—the recommended maximum number for good debt collection practices—was frequently exceeded. The Consumer Ombudsman also noticed this. 

A clearer framework for the accumulation of collection fees

In 2012, the Consumer Ombudsman filed a prohibition application with the Finnish Market Court related to the unnecessary increasing of collection fees for instant credit. The Consumer Ombudsman demanded that the Market Court prohibit the practices used by WestStar Oy, which collected instant credit from consumers, incurring unnecessary costs to the debtors by sending more than two written demands for payment for the same debt for no specific reason.

The Consumer Ombudsman filed the prohibition application to the Market Court before the Government submitted its proposal to the Finnish Parliament for amendment of the Debt Collection Act. The Market Court felt that the prohibition order filed by the Consumer Ombudsman was not clear and defined enough to demand compliance from the business. The Market Court rejected the application.

The Consumer Ombudsman was, however, satisfied with the result, wherein the same principle, regarding the number of demands for payment, on which the application was based, was retained in the amended Debt Collection Act regulation. Under the new Act, debtors may be charged collection fees for no more than two demands for payment. Furthermore, the amendment enhances the ability of the Consumer Ombudsman to effectively deal with businesses that do not comply with good debt collection practices.

Interest ceiling for instant loan  

Another important legal reform concerns instant credit. The primary goal of this reform is to reduce the debt problems caused by instant credit. The Finnish Consumer Ombudsman representative participated in a working group, which discussed reforming legislation pertaining to instant credit, submitting its report to the Finnish Ministry of Justice in the spring of 2012. Amendments to instant credit legislation were approved in Parliament in February 2013, with the Act entering into force within three months of its ratification.

The Finnish Consumer Agency/Consumer Ombudsman representative was heard by both the Legal Affairs Committee and Commerce Committee at the end of 2012 and endorsed the amendments to instant credit legislation specified in the Government proposal. The Finnish Consumer Agency endorsed the chosen interest ceiling based on an annual percentage rate specified in the Government proposal, and considered it vital to clarify and clamp down on the assessment of consumer credit ratings.

The Finnish Consumer Agency also endorsed prohibiting the use of text messaging and other equivalent communication services for a surcharge in credit transactions.

Unnecessary debt collection costs resulted in a court case. Current Issues in Consumer Law (5/2012).
The Committee report on instant loans supported by the Finnish Consumer Agency. Current Issues in Consumer Law (3/2012).

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Guidelines for the marketing of financial services

The Financial Supervisory Authority statement on regulations and guidelines for the marketing of financial services and financial instruments was submitted to the Consumer Ombudsman for comment at the end of 2012.The marketing of financial services comprehends a parallel area of authority between the Consumer Ombudsman and Financial Supervisory Authority, where the Consumer Ombudsman oversees customers in the position of consumer.

In the Consumer Protection Act, the concept of marketing is expansive. Marketing involves all commercial communications, which are used to promote the sale of consumer goods. This basis is primarily seen in draft guidelines, states the Finnish Consumer Agency/Consumer Ombudsman in its statement to the Financial Supervisory Authority.

The Consumer Protection Act is also the central piece of regulatory legislation for all consumer-oriented marketing. Special provisions do not preclude the application of general regulations concerning marketing. On the contrary, Consumer Protection Act regulations supplement marketing regulations in special legislation. As the marketing regulations in Chapter 2 of the Consumer Protection Act apply to the marketing of all products and services, they also apply to the marketing of financial services.

The basis of Consumer Protection Act regulation is that the overall impression given by marketing and advertising or a marketing measure must not be misleading. Ideally, this basis should also be more effectively taken into consideration in guideline details.

More transparency to facilitate comparison

The goal of regulations and guidelines is to promote the quality of financial service marketing materials and information for the customer as well as the development of proper marketing practices. It is also to foster a sense of trust in financial markets and promote their functionality.

In its statement, the Finnish Consumer Agency felt that another goal should be to increase transparency on the market. The information presented in marketing should be easily comparable between products and services.

Credit is also addressed in regulations and guidelines. The Consumer Ombudsman drafted a Guideline for Consumer Protection "Consumer credit in the marketing of goods and services", which deals more comprehensively with issues related to the marketing of credit.

The Finnish Consumer Agency also issued a statement to the Financial Supervisory Authority in 2011, concerning regulations and guidelines for procedures to be observed in the offering of financial services. According to the Finnish Competition and Consumer Agency, distinguishing between procedural and marketing regulations and guidelines requires thought as to what issues should be included in a draft concerning marketing. 

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Reform of the Financial supervision structure

The Finnish Competition and Consumer Authority (FCCA) began operations on 1 January 2013. The agency was created by joining the Finnish Competition Authority and the Finnish Consumer Agency. The new agency increases the societal significance of competition and consumer issues and improves administration efficiency. The legally mandated responsibilities of the joined agencies remain unchanged in the new agency.

The responsibilities of the Finnish Competition and Consumer Authority relate to implementing competition and consumer policy, ensuring good market performance, implementing competition legislation and EU competition rules, and securing the financial and legal position of the consumer. The agency also handles the supervision responsibilities of the Consumer Ombudsman.

The budget for the Finnish Competition and Consumer Authority for 2013 is 11 million EUR. There are approximately 150 employees at FCCA. The agency is currently located at two different offices in Helsinki, but the work to locate shared premises is already underway.

See agency organisation and contact information.

The responsibilities of the FCCA include

  • create proposals and initiatives in order to promote competition, remove regulations and rules that eliminate competition and develop consumer policies and consumer protection
  • follow and assess the competitive environment and developments that affect the consumers’ position and plan rules and regulations associated with business and to provide statements on issues that may have an impact on competition and consumer policies
  • handle the responsibilities mandated in the Competition Act for the agency and to supervise that the decisions made based on the Competition Act are adhered to
  • participate in international co-operation with issues pertaining to competition and consumer policies and to be responsible for the international functions and obligations of the agency
  • supervise package tour businesses' securities and maintain a registry of the package tour companies in Finland
  • promote and implement consumer advocacy and education
  • conduct research, studies and comparisons in its area of responsibility and carry out publishing and communication activities in it
  • guide and educate Regional State Administrative Agencies, financial and credit advisory services and consumer advisory services for Local Register Offices.


ID: 48277
Publication date: 25/03/13
   
URL(s):

http://www.kuluttajavirasto.fi/Newsletter
 

Created: 25/03/13. Last changed: 25/03/13.
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