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Serious problems and legally unclear issues in privatised interest representation services

Ombudsman asks Ministry of Justice for report

Ombudsman Petri Jääskeläinen is of the opinion that many serious causes of concern and legally problematic questions are associated with privatisation of public guardianship services. He has asked the Ministry of Justice for a report and statement on the matter by the end of January.

The Ministry will have to report on, inter alia, the situation with regard to privatisation of public guardianship services in the whole of Finland at the end of the year, who are producing the services and according to what timetable the intention is to outsource services.

The Ombudsman is also asking whether privatisation has led to the level of savings that would justify it and its vigorous expansion. If savings have not been achieved, according to what timetable are they expected to be seen? Further, the Ombudsman wishes to know whether the use of outsourced services has brought the principal any benefit of the kind that public guardianship services have not been able to achieve.

Responsibility for public guardianship services is vested in legal aid offices. Under the relevant legislation, a legal aid office can, having consulted the Ministry of Justice on the matter, outsource these services if such an arrangement is necessary, for example to ensure availability of the services.

The problems associated with privatised interest representation came to light during an inspection by the Ombudsman of the public guardianship department of the Helsinki Legal Aid Office last April and an earlier visit to the Department of Judicial Administration at the Ministry of Justice.  

Is equality being violated?

The Ministry will find additional problematic questions for it to answer in the inspection protocol that was drafted after the Ombudsman?s visit to the Helsinki Legal Aid Office last April.

A matter that the Ombudsman finds problematic is that a person who has been transferred to the sphere of outsourced services may have to pay value added tax, something that is not charged on a service produced by the Legal Aid Office. That would gravely violate the equality of persons whose interests are being overseen.

A further question that causes the Ombudsman concern is whether the economic interests of the parties that produce outsourced services unduly influence their actions. Can it happen, for example, that a service producer will continue service representation for unnecessarily long, because ending it would mean loss of revenue?

Questions of liability likewise require explication. What is the State's liability for compensation for damage caused by a service producer?, asks the Ombudsman. It is also unclear whether private service producers are bound by official responsibility.

The matter must be closely monitored

The Ombudsman emphasises that the development of privatisation and the experience gained from it must be closely monitored. He finds the problems observed on the inspection visit and the legally unclear questions to be serious.

- "If privatisation can be observed to cause something of such a nature that it directly or even indirectly adversely affects the interests of the principal, who is already a priori in a vulnerable position relative to other people, or violates the equality of the person whose interests are being represented, I have the possibility to intervene in the situation within the parameters of my powers", he points out.

The Ombudsman may carry out an inspection visit to some or other private service producer before the end of this year and also a Local Register Office, which is the primary oversight authority for guardianship services.

Interests of over 30,000 people being represented

In 2011 it cost the Helsinki Legal Aid Office €97 per principal, excluding the one-off €100 fee for creating a case-management system. The producer of the outsourced service is a legal office, which charges the state €90 per principal.

Correspondingly, the cost of a service produced by the Espoo Legal Aid Office was €374, whilst a privately produced one cost €530.

The number of persons whose interests were being represented by public guardians was 30,700 last spring. Of these, 3,700 were being catered for using services outsourced from private producers. The service producers were municipalities, legal offices, companies and private parties operating as registered companies. Service producers are chosen on the basis of tendering.