There are over 80,000 consumer credit debtors in Estonia. A lender can recover a debt through expedited proceedings in court if the debtor has no substantial objections.

Under the expedited payment order procedure, a total debt of up to €8,000 can be claimed. However, after lengthy deliberation, judges have concluded that this process is not suitable for consumer credit cases.

"In a regular civil proceeding, evidence is submitted — meaning the judge assesses whether the facts and the evidence align. That's not possible in expedited payment order proceedings, and in consumer credit disputes, the court is actually obligated to check whether certain requirements have been met, namely whether the principles of responsible lending were followed and whether the loan was issued accordingly," said Kai Härmand, head of the Civil Division of Harju District Court.

For this reason, the courts and the court's payment order division have agreed not to process such claims for the time being.

"At this moment, it's simply not possible to proceed with these cases through the standard payment order process, because, in principle, we're just creating more debtors. The principles of responsible lending truly are not being followed — loans are being issued to people who should not be receiving them," Härmand added.

According to Jonna Pechter, head of Bigbank, which specializes in loans, they always check the borrower's background when issuing consumer credit, but in the past, it was up to the customer to provide accurate information to the bank.

"The principles of responsible lending have evolved, and there is now more thought given to expanding the role of banks. But why is it that courts claim they are seeing these payment orders revealing that loans have been issued illegally? One must look around the market — there are indeed lenders who issue loan amounts immediately, without any further analysis," Pechter said.

Minister of Justice Liisa Pakosta (Eesti 200) stated that the payment order system is undergoing reform. Specifically, artificial intelligence is set to be used to screen loan applicants, and a positive credit register is in development.

"Companies are already aware of this, but it's still appalling how the system is being abused. We really want to make it so that if you issue a loan like that, you won't get anywhere — you won't be able to collect it back, because you issued it improperly," said Pakosta.

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