Excessive borrowing can be curbed effectively by collaboration between different administrative branches

To prevent over-indebtedness, wide-ranging and visible financial advice and counselling is needed in various stages of life. By making debt counselling more readily available and by introducing new ways to encounter clients and use online services, those who have excessive debts could be helped more than is currently the case. Tackling debt problems also requires stronger collaboration among different administrative branches. These are some of the observations presented in a newly published report by the National Consumer Society Research Centre of the University of Helsinki on how to curb excessive debt.

The study shows that Finland has failed to address the question of how to prevent excessive indebtedness comprehensively enough. Problems related to excessive debts have not been resolved in a timely manner. Many people in Finland struggle with over-indebtedness and they frequently have other problems too.

In local government, it is important to create operating models between financial and debt counselling services and social services to help solve customers' excessive debt problems. Closer cooperation is also needed between the authorities in other administrative branches and those operating in the third sector. The aim should be to help customers tackle both debt issues and other problems in life in a comprehensive way. Municipalities should offer social loans, micro loans and preventive social assistance as an alternative to costly payday loans offered by credit institutions.

Tools should be created for experts and consumers to use as an advance warning to signal the risk of excessive indebtedness.  Consumers' late payments should be tackled without delay. To do so, municipalities, businesses and debt collection agencies need to make changes to their standard practices to help those struggling with payments. Responsible lending requires that the assessment of consumer credit ratings is transparent and that credit registers are restructured.  To assist those with an excessive debt burden, it is important to concentrate on helping and supervising those in debt restructuring schemes and encourage people to negotiate reorganisation of payments more.

The report on curbing and managing excessive debt is part of the implementation of the 2014 Government plan for analysis, assessment and research. It was drawn up by the National Consumer Society Research Centre of the University of Helsinki. The main data used in the study consists of interviews conducted by those working with over-indebted people (financial and debt counsellors, social services, debt collection and enforcement authorities and third sector actors). Statistical databases, international sample cases and practices as well as workshops were also used.

Report on curbing over-indebtedness and managing it more effectively -report (in Finnish)

Further information about the Government’s analysis, assessment and research at tietokayttoon.fi

Inquiries: Raija Järvinen, Research Director, National Consumer Society Research Centre, University of Helsinki, tel. +358 50 591 2784, raija.jarvinen(at)helsinki.fi and Liisa Peura-Kapanen, Project Planner, tel. +358 50 574 4978, National Consumer Society Research Centre, liisa.peura-kapanen(at)helsinki.fi