The pandemic and its effects on business in Finland.
Interest rates and direct marketing of consumer loans to be temporarily restricted as of 1 July 2020
The Finnish parliament has on 16 June 2020 approved the government’s proposal regarding certain amendments to the legislation on consumer loans due to the coronavirus outbreak. According to the new temporary legislation, the applicable interest rate on consumer loans will be temporarily capped at 10 per cent instead of the current 20 per cent. Also, any direct marketing to consumers will be banned. These restrictions are scheduled to enter into force on 1 July 2020 and apply until 31 December 2020.
Interest rate cap of 10 per cent
The Consumer Protection Act regulates, inter alia, the maximum amount of interest rates and other credit costs charged from consumers.
According to the temporary restrictions, the interest rate on consumer loans shall not exceed 10 per cent (instead of the 20 per cent cap normally applied), even if the agreed interest rate would have been higher. However, this cap of 10 per cent will only apply to consumer loans other than so-called commodity-linked loans. Accordingly, e.g. loans under credit cards such as Visa and MasterCard are excluded from the scope of this temporary interest rate cap (while the 20 per cent cap will continue to apply). It will also be prohibited to increase any fees charged under a credit agreement.
The temporary interest rate cap rate will apply to one-off credit agreements concluded on or after the entry into force of the temporary legislation. However, as regards continuing credit agreements, such as credit limit products, the temporary interest rate cap will apply also to agreements entered into prior the entry into force of the temporary legislation, but only insofar as the credit is used on or after the effective date.
Where the temporary interest rate cap has not been complied with, the Court should automatically dismiss any claim for excess interest.
Prohibition of direct marketing
The new interim provisions regarding direct marketing will impose a ban on direct marketing of consumer loans. The ban will apply to any direct marketing (including electronic marketing) and apply irrespective of whether the marketing is directed to new or existing customers.
However, the ban will be limited to direct marketing only, and will thus apply only to marketing targeted at a specific consumer or household. Therefore, any marketing of consumer loans e.g. by phone, e-mail or personal social media will be prohibited, whereas marketing by newspaper, radio, street or television advertisements will not.
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