Design and implementation of Early Warning tools in Finland

The Commission supported the Ministry of Economic Affairs and Employment of Finland with the transposition of Article 3 of the Directive (EU) 2019/1023 on preventive restructuring frameworks.

In particular, to design early warning tools that could alert debtors of a situation of financial distress at an early stage, facilitating business rescue and giving honest debtors a second chance.

Context 

Finland requested assistance from the Commission to transpose the Directive (EU) 2019/1023 into Finnish law and thus, facilitating access to preventive restructuring frameworks. Technical support was specifically requested for the design and setting-up of early warning tools and enhance access to information.

Finland already had a number of strengths to build on. This included, but was not limited to, a functional telephone helpline service with a multi-stakeholder board, successful pilot experiences of Early Warning mentoring at regional level, a public-private coordination group. Moreover, a baseline strategy for streamlining, defragmenting and professionalising a nationwide Early Warning tool was created.  This last measure involved assisting companies and entrepreneurs in financial distress. As a result of this, the Finnish authorities were able to quickly elaborate a well-structured approach.

Support delivered 

The technical support provided to the Ministry of Economic Affairs and Employment of Finland consisted of an assessment of the current use of early warning tools used throughout the country. An in-depth study of other EU systems that specialise in early warning was also carried out over the course of several webinars.

The technical support also included an action plan to structure the rollout of the Early Warning mechanism for the whole of Finland, across all business sectors.

The information assembled laid the foundation for a communication campaign which set out to raise awareness, particularly amongst businessmen and entrepreneurs, about the existence of early warning tools and information on how to act in a situation of financial distress.  Moreover, the project also provided training to more than 100 business mentors from all over Finland.

Results achieved

The results of the technical support included the launch of a uniform nation-wide system of early warning tools across Finland and an initiating communication campaign to raise awareness about the initiative amongst businessmen and entrepreneurs. Another positive outcome was the training of several mentors, which required regional coordination across the country.

The set-up of an efficient early warning tool reduced the number of honest debtors in temporary financial distress filing for insolvency. The technical support has ensured more debtors were redeemed, giving them a second chance to create value, boosting the economy and further raise employment.