Last spring the Finnish Consumer Agency stimulated discussion concerning responsible lending and social responsibility in this area. It was nice to note that the editor-in-chief of Luottolista magazine, Mr Juuso Jokela, carefully read our newsletter concerning responsible lending. In his opinion, however, the ideas concerning responsible lending in the newsletter were old-fashioned. If this is true, should social responsibility be thrown on the junk pile as something that is outdated? To resolve problems related to over-indebtedness, the editorial in Luottolista called for the complete listing of consumers' debts on the grounds that consumers seeking credit may forget or even lie about background information. This is a rather skeptical view. Perhaps Suomen Asiakastieto, which provides credit information, wants to expand its business and this is why the magazine sees the need for new registers.
The world has indeed changed. The credit market has been deregulated, the number of credit providers is no longer limited to just a few and even cross-border borrowing is being promoted. Consumers often have many credit cards and are not ashamed of borrowing. It is not responsible for businesses to take a nannying approach and doubt everything consumers say, trusting only cold numbers in a register. The question is what and how a professional asks in a credit situation. This is a skill that cannot be outsourced to a register keeper. It is also necessary to remember the causes of payment difficulties, which are still mainly related to sudden changes in people's circumstances. If a creditor acts responsibly - does not give credit in the wee hours, can present credit terms clearly, follows good practice - this reduces problems, but it can never eliminate them completely. For this reason we need effective debt adjustment legislation. Turning to the marginally small group of consumers who become indebted because of gambling addiction, shopping addiction or other such problems, keeping registers cannot resolve their problems, no matter how thorough these may be.
The proper functioning of the credit market depends on adequate competition. Consumer protection is still needed alongside competition, however. Without rules genuine competition cannot exist. The importance of consumer protection is emphasized in the budget of the Federal Trade Commission in the USA, for example. The FTC is responsible for consumer and competition matters. The budget for 2007 earmarks $98,000,000 for maintaining competition and a full $125,000,000 for consumer protection. The USA, the land of free competition, has clearly recognized the importance of consumer protection as a cornerstone of competition.
Municipal consumer advice is being reformed. According to a proposal the number of advisers would be reduced, advice would be centralized in the state provincial offices and the Consumer Agency would remain responsible for supervision. This solution would be successful although the reduction in the number of advisers is not desirable. If the reform is implemented, one must not forget the monitoring of consumer law at the local and regional level with regard to marketing, contract terms and debt collection. Up to now the state provincial offices have only been able to monitor consumer credit and price marking. Although consumer advisers have not had the power to prohibit illegal activities, in monitoring marketing and informing businesses of consumer law policies, consumer advisers have achieved concrete results so far. When an adviser has been close to a business, many matters have been quickly resolved without the need for the Consumer Agency to take measures. The monitoring of compliance with consumer law can hardly be credible if it is not possible to intervene at the local level in clear violations.
Anja Peltonen
Editor-in-Chief, Director of the Consumer Law Division