Editorial: fast loan risks must be managed

Photo: Margus Ansu / Postimees

Nice to know at long last the state has rather decisively tackled the topic of fast loans directly touching tens of thousands, and the entire society via attitudes and impacts thereof. Time will tell how effective will be the solutions, and whether the weaker ones – easily sucked into the vortex – will find genuine protection.

Like some other areas, quick loans now need a system in a situation where chaos hit overnight and the work feels like putting toothpaste back into the tube. On wings of the technology development last decade (spread of Internet, smartphones etc) the business model spread like wildfire and legislation lacking – to say nothing about good practice – reached the masses. The money was obtained simply and swiftly, and for the borrower the psychological barrier was lower – all conducive to thoughtless decisions.

By now, Estonia has had its deep thinking done and investigators are on the trails of risks involved. This spring, as Consumer Protection Board, Chamber of Commerce and Industry, and European Commission Estonian Representation held their joint conference on «10 Years of Fast Loans. Time to Decide», the need for strict and speedy regulation was glaringly obvious.   

In her first lengthier interview, curbing of fast loans was also underlined by the fresh finance minister Maris Lauri. Repeatedly, change of the laws has been mentioned by ministers of economy and justice Urve Palo and Andres Anvelt.

Already at conception, government’s yesterday decision to hand Riigikogu the Advertising Act amendment bill – one to ban quick loan ads in TV and radio – caused quite a turmoil. In a Postimees opinion article, Kanal 2 and Trio LSL Raadiogrupp CEO Urmas Oru critically wrote that merely banning the ads will essentially equal sweeping the problem under the carpet so the politicians can look good in run-up to the elections. The painful issue, he said, would remain.

This is difficult to argue and the public ought to demand a solution more comprehensive. Already, Riigikogu is digesting a bill robbing fast loan providers of options to further squeeze debtors through debt collectors. A step forward, that’s for sure.

Still, thus far the state has been much more inert than the crafty quick-lenders several steps ahead. To alter habit, as is the usual with consumer behaviour, the attack must ensue from several fronts at once. We do need a more effective surveillance and the limits to ensure social responsibility in lenders. While doing that, let’s not forget educating the consumer.