Legal Alerts/22 Oct 2019

Government Bill to Broaden Consumer Protection Authorities’ Enforcement Powers – New Penalty Payment for Infringements

Last week the Finnish Government issued a government bill (HE 54/2019) on a new Act on Certain Powers of the Consumer Protection Authorities together with changes to the Consumer Protection Act, the Act on the Finnish Competition and Consumer Authority, the Act on the Financial Supervisory Authority and the Act on Proceedings in the Market Court among others.

One of this reform’s key objectives is to bring into force the EU Regulation (EU) 2017/2394 of 12 December 2017 on cooperation between the national authorities responsible for the enforcement of consumer protection laws (“CPC Regulation”). This reform also aims to simultaneously meet a national request to strengthen the enforcement of consumer protection laws also in cases that do not fall within the scope of the CPC regulation. By the proposed new acts, the Consumer Protection Ombudsman, the Financial Supervisory Authority and the Market Court will get substantially more enforcement powers. A penalty payment up to 4% will also be introduced.

Penalty payment for infringement of consumer protection provisions

The Government bill introduces a new remedy to be applied in cases of a more severe breach of consumer protection provisions. The proposal sets out a penalty payment that can be imposed on traders if they intentionally or negligently violate the provisions set out in the Consumer Protection Act. The penalty payment can be up to an amount that equals 4% of the trader’s turnover in the financial year preceding the period of time when the act of breach has ceased. The Market Court has the authority to impose the penalty payment based on a petition issued by the Consumer Ombudsman. The Financial Supervision Authority is again able to directly impose the penalty in a matter that falls within the scope of its competence.

The proposal covers a breach against certain provisions on the marketing activities aimed at consumers, conduct in customer relationships, door-to-door selling and distance selling, distance selling of financial services and instruments, consumer credits, consumer loans related to residential property, sale of building elements and building contract and timeshares and long-term holiday products. In exceptional cases, the penalty payment can also be imposed on a natural person who is a member of the management body of a legal entity or exercising the effective control of a legal entity, or on another trader that acts on behalf of the trader.

The Consumer Ombudsman’s right to order injunctions with an immediate effect

According to the proposal, the Consumer Ombudsman’s enforcement powers will be increased by additional investigation and monitoring powers, and in more exceptional cases, even by a power to order the removal of web page content, web pages and, as a last resort the removal of a domain name.

Furthermore, the Consumer Ombudsman could after this reform order injunctions with an immediate effect, and the trader could oppose such order only by filing a petition to the Market Court. This is contrary to the present situation where the Consumer Ombudsman’s injunction order will lapse if the trader opposes such order, and the Consumer Ombudsman must file the petition to the Market Court.

Further steps

The reform is expected to come into force in January 2020. We will monitor the legislative process and provide any necessary updates on this.

The reform stresses the need to comply with consumer protection laws. Borenius’ lawyers are available to assist in addressing any questions you may have regarding the proposed changes.

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