Awaiting precedent: class and representative actions as effective measures of consumer protection in Finland

Siiri Tuokko-Vuoriainen

KPMG, Helsinki

siiri.tuokko@kpmg.fi

Sanna Sipilä

KPMG, Oulu

sanna.sipilä@kpmg.fi

Antti Aalto

KPMG, Helsinki

antti.aalto@kpmg.fi

An old wisdom sometimes heard from older legal professionals in Finland goes along the lines of ‘never take a private person as a client, as small individuals never prevail against big corporations’. But is, and more importantly should, this be the truth in a modern judicial system? Are there means to hold corporations responsible for their actions? And does the private person actually benefit from it?

To implement the so-called Class Action Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (the ‘Directive’), several legislative changes entered into force in Finland during 2023. Although Finnish legislation still does not recognise class actions quite as they are known for instance in common law countries, the Directive and its transposition highlight the risk of non-compliant consumer business practices getting addressed effectively and efficiently. In addition to consumer protection officials, currently organisations promoting the collective interests of consumers may also apply to be appointed as qualified entities which may take the consumers’ collective claim to the court as class (or representative) action.

The 2023 legislation package related to representative lawsuits – meaning cases pleaded by a qualified entity on behalf of consumers – implemented new means of legal action to the Finnish Data Protection Act, the Class Action Act and  the Act on Finnish Competition and Consumer Authority, as well as amending several consumer service specific laws related to medical, financial and travel services. Finnish legislation was also broadened by a brand-new Act on Representative Actions for Injunctive Measures (the ‘Representative Action Act’).

The objectives of the Representative Action Act are to give certain authorities and qualified entities an opportunity to end a trader’s harmful conduct by obtaining an injunction from the court, possibly with a conditional fine to enhance the injunction’s effects. The action can be taken when a trader’s conduct causes or could cause harm to the common interests of consumers laid down in the legal acts listed in Annex I of the Directive. In the government proposition to the new Representative Action Act, it has been stated that a trader breaching legislation applicable to it could cause harm to the common interests of consumers[1]. Thus, whenever a trader having consumer clients oversteps regulatory boundaries, it risks representative action and, as a consequence, an injunction.

However, the Representative Action Act does not contain measures to claim damages or obtain other remedies. Such damages and other remedies are to be claimed for in accordance with the Class Action Act, presented by the consumer protection official or another qualified entity, but only if the participating consumers’ claims are based on the same or similar circumstances and provided that the size and precise definition of the group, nature of evidence and content of the claims support handling the matter as class action. This causes the matter to be handled in two different courts: representative actions under the Representative Action Act in the Market Court, and class actions in Helsinki District Court. Also, the eligibility of the matter to be handled in court is evaluated independently under the two different acts.

For a single consumer, the new Representative Action Act provides little comfort in comparison to the previously existing Class Action Act and the opportunity to claim damages through the older system. Although the Representative Action Act aims to benefit consumers as a collective, in an individual case it remains to be seen whether authorised claimants risk court fees and extensive time and resources to obtain an injunction when it is not possible to provide tangible remedies to the consumers suffering from questionable conduct of a trader in the same court, in the same matter. As representative action has only been possible since June 2023, Finland has yet to see a precedent of a successful representative action. Even class actions in Finland have had very little public coverage, although the threat of class action has been utilised successfully by the Consumer Ombudsman in negotiations with instant credit companies[2].

To summarise what the changes have meant to consumers in Finland, it seems that, as of yet, there has not been much impact besides the effect on distribution of negotiation power amongst relevant parties. It remains to be seen how eagerly the newly adopted legislation allowing for a broader possibility to representative lawsuits is utilised, and what effect the changes have on the cost of non-compliance.