Decisions
Assessment of creditworthiness, authority, direct multiple discrimination, gender, language, age, place of residence, financial reasons, conditional fine
Multiple discrimination in the assessment of creditworthiness
Register number: xx16/2017
Date of issue: xx.xx.2018
Summary
The Non-Discrimination Ombudsman requested that the National Non-Discrimination and Equality Tribunal to investigate whether a credit institution company was guilty of discrimination prohibited in section 8 of the Non-Discrimination Act by having refused to grant credit to A in connection with A making online purchases, based on matters classified as grounds of discrimination, such as gender, age, language, and their combined effect. The Ombudsman requested that the Tribunal prohibit the credit institution company from continuing such discrimination and repeating its discriminatory practices in its service operations and impose a conditional fine to enforce the prohibitive decision, of an amount the Tribunal considers sufficiently effective, proportionate, and cautionary.
The Non-Discrimination Ombudsman considered that even if an individual score is made up of statistical variables, the score in question was not an individual assessment based on the income level and financial status of the person in question, but a case of statistical profiling, which was mainly based on reasons related to grounds of discrimination.
The credit institution company considered that its decision not to grant credit to A did not result in the arising of a assumption of discrimination and that it has not discriminated against the credit applicant nor used discriminatory criteria in its credit extension. Even if a specific criterion may as such seem discriminatory, the company states that pursuant to section 11, subsection 1 of the Non-Discrimination Act, different treatment does not constitute discrimination if the treatment is based on legislation and has an otherwise acceptable objective and the measures to attain the objective are proportionate. According to the company, the methods it uses in the extension of credit to consumer clients for the purpose of attaining the acceptable objectives stated in the said Act as well as the use of statistical assessment methods for the purpose of assessing the financial standing of credit applicants as a part of the overall assessment have been unambiguously accepted.
Based on section 3 of the Non-Discrimination Act and its drafting history, the National Non-Discrimination and Equality Tribunal considered that the case of multiple discrimination at hand is within the scope of application of the Non-Discrimination Act, even though one of the criteria used in the assessment system for creditworthiness was gender. Furthermore, the Tribunal stated that it could not issue a decision on the matter without adopting a position on the interpretation of the Act on Equality between Women and Men, as this is a case of multiple discrimination in which gender is one of the grounds of discrimination. The Tribunal considered that the drafting history of the Non-Discrimination Act reveals that the Tribunal has the required authority to give its decision on the matter, also as regards its interpretation of the Act on Equality between Women and Men, even though the matter was not initiated by the Ombudsman for Equality or a central labour market organisation, as stated in section 20 of the Act on Equality between Women and Men.
According to the substantiated report presented by the Non-Discrimination Ombudsman, the grounds for the scores in the scoring system used by the company for the assessment of creditworthiness, the purpose of which is to decide whether or not to extend credit to individuals, included several factors related to the person of the applicant, such as gender, language, place of residence and age, all of which have been prohibited as grounds for discrimination in the Constitution of Finland, the Non-Discrimination Act and the Act on Equality between Women and Men. This resulted in A being put in an unfavourable position in the assessment of creditworthiness and in the decision following the assessment on extending credit, which was based on a schematic assessment using prohibited discriminatory grounds. The National Non-Discrimination and Equality Tribunal considered an assumption of direct multiple discrimination to have arisen in the matter.
Based on the information it has received, the National Non-Discrimination and Equality Tribunal considered the scoring system-based assessment used by the credit institution company to have used statistical data and payment default information related to other people, based on which assumptions regarding the financial standing of A were made. The company, on the basis of prohibited grounds of discrimination such as gender, first language, age, and residential area, assumed that the financial standing of A was weaker than it would have been if measured with other properties. At the same time, the company ignored the information regarding A’s own credit behaviour and creditworthiness even though these factors would have favoured extending credit to A. Disregarding such information about A by using formal and abstract statistical credit data based on the credit behaviour of others, without performing an individual assessment of A’s financial standing, was disproportionate and therefore not acceptable as intended by section 11 of the Non-Discrimination Act.
Therefore, the method used by the company for the assessment of A’s creditworthiness was not based on an individual assessment of A’s creditworthiness but a statistical assessment method that was essentially based on prohibited grounds of discrimination as defined in the Act on Equality between Women and Men and in section 8 of the Non-Discrimination Act.
As the method used in the assessment of the creditworthiness of the credit applicant was based on grounds of discrimination expressly prohibited in the Non-Discrimination Act, the Act on Equality between Women and Men and subsection 2, section 6 of the Constitution of Finland, the National Non-Discrimination and Equality Tribunal has taken the view that financial reasons could not be considered reasons that meet such particularly high requirements justifying different treatment based on the prohibited grounds of discrimination in credit extension.
The National Non-Discrimination and Equality Tribunal concluded that the credit institution company was not able to rebut the assumption of discrimination that had arisen, and that the behaviour of the company toward A was a case of multiple discrimination as prohibited in the Non-Discrimination Act and the Act on Equality between Women and Men based on reasons related to the gender, first language, age and place of residence of A.
The National Non-Discrimination and Equality Tribunal prohibited the credit institution company from renewing the procedure, targeted at A or anyone else, which the decision of the Tribunal found to be contrary to section 8 of the Non-Discrimination Act and section 8e of the Act on Equality between Women and Men.
The National Non-Discrimination and Equality Tribunal imposed a conditional fine of 100,000 euros to enforce its prohibitive decision and decided, considering subsection 3, section 6 of the Act on Conditional Fines (Uhkasakkolaki, 1113/1990), that the decision of the Tribunal must be observed within six months of notification of the decision (vote on the sum of the conditional fine).
(The decision is now final)
Published 23.7.2024