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The Parliamentary Ombudsman has handled complaints concerning disputes in which a court decision has led to a payment default entry even in cases which have been genuine disputes concerning obligation to pay in which a solution has been sought.
In one case in question, the complainant had declined to pay for a product he/she had purchased, because the buyer felt that the product was not that which was promised. In the debt recovery case, the complainant had contested the claim, but the district court had come to a decision that the complainant shall be obligated to perform payment. After this, the complainant had paid for the purchase, but the court decision had led to a payment default entry. The complainant felt that he/she should have the right to receive a court decision on the obligation to pay in a dispute without the possible judgment leading to a payment default entry. The complainant was not unable or unwilling to pay, but felt that the received product was not that which was promised.
Parliamentary Ombudsman Petri Jääskeläinen investigated the matter on a more general level as an own initiative.
On the basis of the submitted report, he found that due to the case management system (Tuomas) used by courts and court procedures, a court order to perform a payment will always lead to a payment default entry if the proceeding has been instituted as a non-disputed case. This also happens in cases where the defendant has disputed the action and due to the case being contested, the case has been handled as a more complex dispute. The Parliamentary Ombudsman states that these cases do not meet the condition in the Credit Data Act for a payment default entry, which states that an entry must demonstrate insolvency or an unwillingness to pay.
Parliamentary Ombudsman Jääskeläinen states that data like this, which is against the Credit Data Act and the Personal Data Act must not be forwarded from the Ministry of Justice's data system to credit reporting companies. In order for the legal rights of debtors to be protected, it is important that the erroneous entries resulting from the data system's faulty functioning must be erased from credit data registers and steps be taken to prevent future forwarding of this type of information to credit reporting companies.
The Ministry of Justice has stated that this error can only be corrected in the future case management system (AIPA), which will be adopted at latest sometime in 2018. As an immediate measure, the Ministry of Justice suggests credit reporting companies remove these erroneous entries from their registers pursuant to the Credit Data Act (527/2007) and the Personal Data Act (523/1999). The Data Protection Ombudsman could also within the scope of its statutory authority under the Personal Data Act bring the deletion of the mentioned data to the attention of a credit data register maintainer and provide guidance in this matter.
The Parliamentary Ombudsman is not aware of how many debtors have received a payment default entry on erroneous grounds and suffered from its consequences. It is the Parliamentary Ombudsman's understanding that this applies to a significant number of debtors.
The Parliamentary Ombudsman considers that the system error that has led to the forwarding of erroneous payment default data is serious. Taking into account the serious consequences of a payment default entry for debtors, measures to correct the erroneous information cannot wait for future data system reforms. The Ministry of Justice must immediately and in cooperation with authorities and other parties take action to ensure that data contrary to the Credit Data Act is no longer forwarded from the courts' data systems. Credit reporting companies should also erase erroneous and misleading entries from the credit data register.
Parliamentary Ombudsman Jääskeläinen proposes that the Credit Data Act be amended so it is more clear with regard to recorded court decisions so that only undisputed cases in which a decision is due to insolvency or an unwillingness to pay can lead to a payment default entry. The Parliamentary Ombudsman has presented that the Ministry of Justice take action to supplement and specify regulations.
The Parliamentary Ombudsman has requested that the Ministry of Justice notify the Ombudsman of the actions it has taken in the matter no later than on 31 December 2017.
For more information, please contact Principal Legal Adviser Riitta Länsisyrjä, tel. +358 (0)9 432 3363