Justice Ministry Seeks to Rein in Instant Loans

A justice ministry working group looking into problems associated with quick loans calls for improved personal data protection and limiting loan granting to daytime hours.

The working group wants quick loan companies to disclose real annual interest rates -- a measure which would improve consumers' ability to compare loan fees.

As quick loans have in some cases been applied for by using another individual's personal information or cell phone, the working group also wants to see mandatory identity verification instated. Personal internet banking codes could provide such verification, suggests the group.

Furthermore, the working group wants to decrease hasty borrowing by restricting quick loan granting to daytime hours.

The group, however, points out that legislation alone cannot solve all of the problems associated with instant loans. People need to become more educated on financial matters and have improved access to affordable credit, says the working group.

Quick loans usually refer to small loans totalling a few hundred euros. Consumers apply for and are granted such loans via text message or the internet. This form of credit, which is usually granted for periods shorter than three months, does not require a co-signer.

The group handed its proposal on tightening quick loan regulation to Justice Minister Tuija Brax on Tuesday.