A miserable new record: Almost 390 000 people with payment defaults in Finland
At the end of 2019, there were 386 700 persons with payment defaults in Suomen Asiakastieto Oy’s register (+4 800 pcs., +1,3 %). During the year, 1,8 million new payment default entries in total were registered to consumers, i.e. 20 per cent more than in 2018. Young people bring some alleviation to the sad figures.
”The share of persons with payment defaults decreased slightly in all age groups of under 30 year olds. This is a pleasing signal, even though as a whole the statistics are quite gloomy reading”, says Jouni Muhonen, Business Director at Asiakastieto.
A law amendment entered into force at the beginning of September to prevent the overindebtedness caused by consumer credits has not provided a turn to the payment default trend.
”There were a lot of new entries, but they were registered to a slightly smaller group of people. Same persons have debts to many directions which means that several payment defaults are quickly registered when problems accumulate. Reversing this trend requires a wider use of positive credit information. Companies would then have a clearer view of their consumer customers’ other liabilities and risks already before a payment default entry”, Jouni Muhonen ponders.
New register will not get ready in time
A decision on the building of a positive credit information register in Finland, maintained by the public authorities has been made and, according to the ministerial working groups drafting the project, it should be available in spring 2023. Based on his experience, Jouni Muhonen considers it almost certain that the register will not be implemented this fast.
”Information is needed already now, but introducing the new register requires changes in legislation, coding of the system and readiness of the data suppliers to transmit data. By experience of decades, we know the challenges of these projects and it must also be taken into account that the new register means data, which is only assembled to one place. Its value and usability are solved with services, which are built on top of the register, in all probability by the private sector”, Jouni Muhonen states.
It has been proposed that positive credit information be linked to the income register. According to Mr Muhonen, also the data in the income register would be highly valuable with respect to responsible credit decisions and calculation of payment ability.
”Why is valuable income information not provided for the use of credit grantors, although this would be quite fast to manage technically”, Muhonen wonders.
Asiakastieto is building a housing loan extension to its service
A debt ceiling to households has also been considered to prevent the overindebtedness of consumers. Data of all debts, also housing loans, is needed to determine the ceiling. At the initial stage, the new positive register would only contain data of consumer credits, which is not enough to calculate the level of indebtedness of households.
”Coverage is the most important factor with respect to the value of positive credit information. This is why Asiakastieto has already begun to build an extension, which makes it possible to import housing loans into its own service of positive credit information. We have discussed this with our clients, and their reaction to the extension has been positive.”