Description
The credit market in the Baltic region as well as in Estonia and Norway is highly integrated and characterised by orientation to modern credit products such as consumer loans obtainable via mobile phones or via internet. Such innovative credit products have made it very easy to obtain credit, however often at extremely high interest rates and other costs. Through academic research, this project aims at suggesting what legal measures should be used for tackling consumer over-indebtedness due to the use of modern credit products in Estonia, Norway and in the Nordic-Baltic area.
Summary of project results
The objective of the project was to analyse problems connected to consumer credit not only in Estonia and Norway but also in the whole Nordic-Baltic area. The primary goal of the project was to find out what legal measures should be used to tackle problems connected with consumer credit, while finding an acceptable balance between consumer protection, right to innovative entrepreneurship and fair access to credit. The focus was set on questions related to usurious instant consumer loans, the principle of responsible lending, party autonomy restrictions in consumer credit contracts as well as consumer protection issues in financial leasing. It was established that when it comes to fighting against usurious electronic lending practices some methods such as APRC/interest rate restrictions and licensing seem to be more effective than others (such as the unconscionability doctrine in Estonia). It also turned out that the standards for responsible lending as well as the sanctions for breaching this principle differ greatly from country to country. It was further shown that the Estonian and Norwegian rules and case law on consumer credit, including mortgage lending are well in line with the requirements set by the Court of Justice of the European Union (CJEU) case law and by the EU consumer protection directives. However, it has become doubtful whether the Estonian order for payment system is in harmony with the Unfair Terms Directive as recently interpreted by the CJEU. It is also maintained that substantive-law provisions alone are not enough for effective consumer protection in the area of consumer credit. The fact that consumers tend to be rather passive in asserting their rights means that in practice procedural-law factors are at least equally important. This is especially evident in a) ex officio obligation of unfairness control of standard terms; b) consumer arbitration and c) order for payment procedure.
Summary of bilateral results
The Norwegian participation in the project was taken care of by professor Kåre Lilleholt and by administrative staff of the Faculty of Law of University of Oslo. The 2013 and 2015 conferences and the 2016 seminar gathered researchers from Estonia, Norway and other European countries in addition to representatives of important stakeholder groups. The project has definitely contributed to a deeper and more consolidated relationship between the law faculties in Tartu and Oslo. Through co-authorship, seminars, research stays in Oslo, guest lectures in Tartu and Tallinn the co-operation has run very smoothly. The cooperation is reflected also in several co-authored papers. The project was not limited to purely academic activities: disseminating the findings to the stakeholders and thereby influencing legal policy was considered important from the very beginning. Estonian project participants have had meetings with the consumer credit stakeholders in Estonia and acted as independent advisors for the Estonian government officials by drafting new legislative amendments aimed at tackling problems of usurious consumer credit. Therefore one might conclude that the project has had a positive impact on disseminating information on responsible lending in Nordic-Baltic area and contributed to better consumer protection in consumer credit.