Lenders could prevent people living in Finland from taking out a mortgage if their Finnish or Swedish language skills are deemed insufficient, an Yle report has revealed.
Oulu resident Emma Päkkilä told Yle about her experiences of trying to secure a mortgage alongside her German spouse.
Päkkilä recounted how she sent online loan applications to several banks but seemed to hit a brick wall with each.
She had also scheduled an appointment with a mortgage advisor at her own bank, S-Bank, and spoke with a bank representative by phone before the meeting.
"I told them that my spouse doesn't speak Finnish and the official told me that it was not worth arranging a meeting. The reason given was that the bank only offers services in Finnish and Swedish," Päkkilä said.
She added that the couple had wanted to either take out a loan immediately or link her German spouse to Päkkilä's ASP (home saver's bonus interest) account.
However, S-Bank's representative told Päkkilä that as her spouse does not understand Finnish or Swedish, the bank cannot be certain that they understand the terms of the loan. Therefore, the ASP account could not be merged and a loan could not be granted.
"It also did not occur to the clerk that we could come with an interpreter or have the necessary documents translated at our own expense. They said that this is S-Bank's policy," Päkkilä explained.
While she accepts the bank's policy that a customer must understand the terms of a contract they are signing, Päkkilä argues that it should be possible to achieve this with the help of an interpreter.
"The whole thing left a really bad taste. It seemed that the official's tone became blunt as soon as I mentioned my spouse's lack of language skills. However, S-Bank states on its website that foreign nationals can do business with a legally competent, fluent person," she noted.
Päkkilä received a similar reply from Säästöpankki Optia, with loan negotiations refused due to her spouse's lack of language skills.
S-Bank confirms strict language requirement
In a statement to Yle, a representative of S-Bank confirmed that the company does indeed have a strict language requirement for mortgage lending.
As a rule, the bank will not lend to a person with insufficient Finnish or Swedish language skills, even with the help of an interpreter.
"A credit agreement is an extensive and complex entity that requires that the customer understands what they are committing themselves to. The customer's legal protection is ensured when they understand the terms of the agreement," the bank's Director of Customer Management, Henna Koski, told Yle by email.
While Koski noted that the bank cannot directly comment on specific customer cases, she noted that in the case of Päkkilä and her German spouse, the bank's official may have interpreted the company policy too strictly — as the requirement can be relaxed if two people take out a loan together and one of them speaks Finnish or Swedish.
"In this case, one of the borrowers can translate the documents and make sure that the other party is aware of and understands what is said in the loan and pledge terms. We apologise that a misinterpretation has taken place," Koski wrote in her email to Yle.
However, it is not possible for a person to apply for a loan from S-Bank on their own if they do not understand either Finnish or Swedish to a sufficient level.
Koski added that the language skills requirement is not as strict for basic banking services, such as opening a current account, as for mortgage lending. The more basic banking services are available if the official and the customer share a common language, or if the customer has an interpreter with them.
Säästöpankki Optia also replied to Yle's questions regarding Päkkilä's experience, but said it cannot comment on individual customer cases. However, the bank noted it requires that customers who do not understand Finnish or Swedish use an official interpreter during the negotiation process and for the official documents.
Financial Authority: Bank's policy is permitted
As a general rule, banks in Finland have the legal right to determine the conditions under which a loan is granted, according to Sanna Atrila, a Senior Legal Advisor at the Finnish Financial Supervisory Authority.
Basic banking services must be made available to everyone, Atrila noted, but the rules are different when it comes to providing loans. In addition, banks are not legally obliged to offer services in languages other than Finnish or Swedish, although some institutions do offer a wider range of languages.
"Loans are also riskier products for the customer, and the customer must of course understand what they are agreeing to," Atrila said, adding that banks have a right to assess a customer's language proficiency, especially in the case of a large loan transaction.
"If all contract material is only available in Finnish or Swedish, I would have reservations about using only an interpreter for such complex services," she said.
Atrila further noted that the issue of language rarely comes up in relation to the granting or refusing of mortgage applications, as banks generally offer such services in languages other than Finnish or Swedish.
"Discriminatory behaviour"
Emma Päkkilä told Yle that she and her spouse eventually switched their main banking services to another provider, where their ASP accounts could be linked despite the language issue.
In her view, the bank's policies in this area are discriminatory and her experience has led her to think more broadly about the positions of people with a foreign background in Finnish society.
"There is a lot of talk about the importance of promoting work-based immigration. The discrimination practised by banks does not make it any easier to stay in Finland if a mortgage can not be obtained on the basis of language skills," Päkkilä noted.
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