Why do consumer payment default trends differ in the neighbouring countries Finland and Sweden?
There are differences in the development of payment defaults in Finland and in Sweden. The judicial systems are different in the two countries and the difference of the development of payment defaults cannot easily be compared. However, according to data provided by Asiakastieto Group – which UC is a part of, there are some similarities.
During 2019 there were roughly 1.9 million payment defaults registered on Finnish consumers and the amount of people with payment defaults today is rather high – 386 700 persons have approximately 15 defaults each. Data provided by Asiakastieto shows that there is a heavy increase of payment defaults over the last two decades in Finland, but thankfully the increase rate seems to be slightly declining.
On the other hand, the figures regarding first time payment defaults for consumers show a worrisome trend. From these numbers in combination with the numbers of people having existing payment defaults, we can conclude that it is the same group of people, out of the 386 700 persons, that just keep on getting new payment defaults and keep on falling into more debt. This is an evil circle that needs to be broken.
First time payment defaults for private individuals in Finland are typically court decisions on demand for payments, which are needed in order to put the debt to the recovery procedure. Those defaults stand for approximately 16 % of the total of all payment defaults for consumers in Finland.
When it comes to all payment defaults for Finnish consumers, the biggest share is invoices from public health care, transportation, insurance etc. that can be put straight to the debt recovery procedure without judicial process.
In Sweden, data from UC shows that payment defaults have declined since 2013 and heavily during 2019. The Swedish payment defaults that UC present in consumer credit reports consists of several types of defaults. In total there were 4.7 million defaults registered on consumers by the end of 2019.
The verdicts from the Swedish Enforcement Authority constitute the largest part of the payment defaults. Verdicts for an order to pay, that is mainly debts to the private sector, have declined slowly but steadily. Another contributing factor to the overall decline of registered payment defaults most probably has to do with changes in the Swedish law made in December 2018. The change was in regards to unfair notices of payment defaults, which resulted in private individuals now getting two weeks to pay unpaid debts to government authorities. Earlier, the notice of payment default would have been registered immediately when the debt was registered with the Swedish Enforcement Authority.
Another huge group within payment defaults is individuals who have not paid their taxes. Nonetheless, records of non-payment have decreased slightly over the last years and there are about 10 000 persons at present who have records of non-payment.
A category that has disappeared in Sweden in its entirety is the radio and television fee, which since January 1st2019 has become a Public Service fee for all individuals over the age of 18. Since it is now a tax it can no longer result in a payment default, but in 2018 this category was comprised of 22 000 defaults. Student aid fees, where former students have not paid their student loans, have also decreased slightly over the last years to amount to 10 000 individuals at present.
To conclude, as opposed to Finnish trends within payment defaults, there has been a longer period of declining payment defaults in Sweden. However, some Swedish payment defaults connected to loans and credit card debts have increased, but from low numbers.