Class actions would fill a big gap in consumers' security net. The proposed model is moderate and businesses' concerns have been taken into consideration in it. Group complaints are also a welcome reform but they would not eliminate the need for class actions.
Working groups appointed by the Ministry of Justice have recommended that the Consumer Ombudsman could assist consumers in court with the help of a class action and that the Consumer Complaint Board could consider group complaints.
Markets can only work well if all businesses abide by the rules and if infringements are dealt with as rapidly as possible. A company that receives financial benefit from illegal activity harms competing companies' possibilities to succeed. Allowing class actions does not threaten the reputation or finances of companies that operate fairly but means that anyone using unfair practices can be brought in line and consumers' confidence can be preserved in the field in general, since the matter can be handled more quickly and consumers can count on getting compensation.
A group complaint and a class action are different things
Since businesses have reservations about allowing class actions, it might seem an easy solution to think that a group complaint could take its place. This is not the case, however. Class actions are needed in situations where the Consumer Complaint Board cannot handle the matter - the Board can only make decisions on the basis of written materials and cannot hear witnesses, for example. A group complaint would facilitate the handling of a matter in many ways from the viewpoint of the parties concerned as well as the Board, but a decision made on the basis of a group complaint would remain a recommendation and would not have legal force.
A class action may also be needed in situations where a company fails to abide by the Board's recommendation - and such cases exist. The compliance rate with the Board's recommendations is about 75%, which means that one company in four does not abide by recommendations, and these are not simply individual complaints against small companies. It is unfair to companies that comply with regulations for competitors to get an unfair edge in this way.
A group complaint would only concern cases brought to the attention of the Consumer Complaint Board. Class actions could be needed in cases that have been brought to the attention of the Insurance Complaints Board or the Securities Complaint Board. Group complaints have not been planned for these.
Class actions would require pressing reasons
A public class action model has been proposed for Finland. In this model only the Consumer Ombudsman could file a suit. Since the matter would be handled by a public authority with official responsibility and without financial interest, there is no cause to fear that class actions would be used in insignificant cases. The criteria for filing a suit would be the same as in present assistance activities.
The Consumer Ombudsman can assist individual consumers in legal proceedings if a case has broader social significance, for example because it sets a precedent or concerns a large group of consumers. Although class actions would take time, they would be a much faster and more effective way to resolve cases that are now handled individually. Even if a court ruling in an individual case sets a precedent, it has not been possible to ensure the effectiveness of the ruling in similar matters.
Nor is it a new thing that public funds are used to support citizens' legal security. In a class action this would mean the Consumer Ombudsman serving as the plaintiff and being responsible for costs. Since the Consumer Ombudsman already handles individual assistance cases, no additional costs to society would be incurred if some cases are handled as a class action. In the Consumer Ombudsman's assistance activities it has been possible to cover the consumer's legal costs with public funds, so changing the role from helper to plaintiff would not signify a change from the viewpoint of public support. On the other hand class actions would save the judiciary's costs, since instead of several processes concerning similar matters only one case would have to be resolved.
Financial value can be small from the viewpoint of legal costs but still significant
A class action is an economical means in cases where the financial value is less than legal costs, in practice under 1,500 euros. The only sensible alternative up to now has been to take the matter to the Consumer Complaint Board. But should a group of consumers remain without justice if the Board cannot handle the matter or if a company does not abide by the Board's recommendation? And would it be fair or just if a company violating regulations benefits from a breach of contract with an entire group of consumers?
The fact that the financial value is small in relation to legal costs does not make it automatically insignificant or mean that there is no need for legal protection.
Narrower model than the other Nordic countries
In Finland a class action suit could only be initiated by the Consumer Ombudsman. In the Swedish and Norwegian model as well as the model proposed in Denmark, individuals and organizations could also initiate class action suits. The models also differ with regard to the formation of a group in a class action. Norway and Denmark have an opt-out model for small amounts, with all the concerned parties automatically in the class. A narrower opt-in model has been proposed for Finland, with participants being required to join the class in order for the ruling to apply to them. The Swedish Consumer Ombudsman has said that she is not happy with this model. It is important to monitor the effects of the model on week consumer groups' legal security.
Examples of cases in which a group action could be brought