2019 was, as in previous years, a year of events for the Directorate.

As was noted in the 2018 annual report, the Office first noted the growing problem of instant loans in that year. The undersigned have expressed their concern about the danger signs that have been emerging regarding the financial problems of young people and have pointed out that the problem needs to be addressed through increased education and clearer regulation of lenders. The Office was represented in a working group on reviewing the working environment of small loan companies, which was appointed by the Minister of Industry and Innovation. The working group submitted its findings in January 2019.

At the end of 2019, the Icelandic Parliament passed a law amending the Act on Consumer Credit No. 33/2013. The amendment included a registration requirement for lenders and loan intermediaries that are not also financial institutions. It also provided for a clearer legal framework and a reduction in the permitted annual cost ratio from 50% to 35%. The Office believes that the changes have taken good steps towards better legal protection for individuals on the loan market. However, more needs to be done and the Office has emphasized that education and access to information is key for individuals to make informed decisions in finance.

In light of this, the Office has not lost ground when it comes to financial education. One of the Office’s guiding lights in education has been cooperation with public bodies and organizations that interact with individuals who may be in financial difficulties, and this has been a success.

An important step forward was made in the service of the Office in 2019 when a new website of the Office came to light. With it, access to neutral education on finance was greatly increased as well as the presentation of information on the Office’s activities and services was devised in a new way. With the website, access for individuals was also increased so that individuals can now request a direct call to counsellors. It is the hope of the undersigned that the website of the Office will grow and thrive in the coming years and serve applicants and others who seek information about the Office’s work and personal finances equally.

In 2019, a new arrangement was also introduced regarding applications to the Office. Instead of the applicant choosing in his application between resources at the Office, i.e. counselling, payment adjustment or financial assistance for transition costs, now an application is made for assistance for financial problems. The Office’s employees then analyse and evaluate in consultation with the applicant which resources are best suited for resolving the person’s problem. In this way, the Office seeks to improve service to applicants and that service becomes more focused and waiting times for resolution decrease.

The Office's tasks are numerous and constantly evolving. This has been described in more detail. The Office's staff has a wealth of knowledge, experience and, in particular, adaptability and I would like to conclude by thanking the staff for their hard work.

The office is a service where individuals can get free assistance from experts in resolving financial problems.

Main projects:

• Advice

• Call inquiries and telephone consultation

• Education about household finances

• Type of maintenance criterion

The Office also implements the following resources:

• Implementation

• Granting financial assistance to

The objectives of the Debtors Ombudsman

• provide the best service at all times and the emphasis is on continuously looking for ways to improve it.

• The Embassy maintains a strong telephone consultation where you can seek more information about the services available and receive answers to simple questions and advice on where to seek further answers or services.

• In addition, you can also send inquiries to the office via the website, e.g. request a call or receive written answers to individual inquiries.

A new application process

In 2019, a new arrangement was introduced regarding applications to the Office. Instead of the applicant choosing in his application between resources at the Office, advice, payment adjustment or financial assistance for transition costs, now an application is made for assistance for financial problems.

The office's employees then identify and evaluate in consultation with the applicant which remedies are best suited for the resolution of the person's problem. In this way, the office seeks to improve service to applicants and that service becomes more systematic and waiting times for resolution decrease.

The office seeks to offer its employees flexible working hours with the aim of making it easier for employees to balance work and private life without compromising the services provided by the office.

The Office has been fortunate over the years with good staff. The majority of employees have worked since the office was founded and even worked before before the office’s predecessor, which was the Financial Advisory Office for the Households (mean age takes into account this). The Office has therefore developed a great knowledge of what concerns the financial affairs of the households.

At the beginning of 2019, there were 18 employees in 17 positions, but by the end of the year, the number of employees had decreased to 17 employees in 15.8 positions.

The Debtors Ombudsman grants employees to take care of their health and exercise. In 2019, health grants were paid out to 13 employees, of whom 10 employees received full grant and 3 partial grants. The total allocation was ISK 423,000.

One employee had an annual transport contract and received a transport grant of ISK 35,000.

At the end of 2019

• 17 employees

• Average 10 year service age

• 45,9 years average employee life expectancy

The Debtors' Ombudsman's ( Debtors' Ombudsman) standards are intended as a reference when solving debt problems through the Office's resources. The standards are intended for a shorter period than the standards of various other institutions, for example, typical standards of the Ministry of Welfare. The Office's standards take into account real expenditure of Icelandic households according to the expenditure survey of Icelandic households by Statistics Iceland.

Applicants must state in their application various costs of living, such as heat, electricity, childcare, property taxes and they are added to other costs to calculate the total cost of living for the family. The criteria thus take into account the circumstances of each applicant.

The Office has promoted this project in various ways, such as through information on the website and on the office’s facebook page and through communication with the media about the problem of debtors and about the resources available.

The Office has put great emphasis on education and prevention in recent years and good cooperation has developed, e.g. with parties that service individuals who may need assistance due to financial problems. In 2019, 20 educational meetings were held. The Office has cooperated well with service centers in the capital area and offered education for social workers and other employees. The Office has also participated in various projects and offered education for participants and professionals.

New website

In March 2019, the final touches were made to the new website of the Office and it was launched on 25 March.

The website offers somewhat changed annual highlights, but in addition to accessible and useful information about the Office's resources, it contains various useful information about personal finances.

It is now possible to submit a request from the website and order a telephone call, and it is the hope of the office that this option will increase access for individuals to the service of the office.

The youngest group

On 25 March 2019, a morning meeting was held by the Debtors’ Ombudsman and the Association of Financial Institutions, the meeting was entitled: Loans for the young, young people and lending in the digital world.

The purpose of the meeting was to discuss the increase in the number of individuals between the ages of 18 and 29 who seek assistance from the Office because of financial problems.

The conference was very well attended, with over a hundred people attending to listen to presentations and panel discussions.

The Office’s annual report for 2018 analysed this group in a fairly detailed manner, stating that in 2018, this group comprised 27.5% of all applicants, and by the end of 2019, the same group comprised 35% of all applicants for payment adjustment.

Another characteristic of the group was that 77% of the individuals in this group had what the Office has defined as a quick loan. The composition of the group in 2019 is similar to 2018.

In 2019, a new arrangement was introduced regarding applications to the Office. Instead of the applicant choosing in his application between resources at the Office, advice, payment adjustment or financial assistance for transition costs, there is now one application, an application for assistance for financial problems. The Office’s experts then analyse and evaluate in consultation with the applicant which resources are best suited for resolving the person’s problem. In this way, the Office seeks to improve service to applicants with more efficient analysis and shorter waiting time for resolution.

Total number of applications received by the Directorate in 2019

• 1125 Applications for aid due to financial problems

Here you can see how the applications received in 2019 went after analysis.

• 418 Advice

• 348 Payment Adjustment

• 120 Financial aid for the payment of transition costs

Applications for financial assistance in figures

Advice is initiated after the application for assistance due to financial problems has been received and an analysis has been carried out in consultation with the applicant.

The advice includes the preparation of a credit difficulties assessment with the aim of gaining an overall view of the financial situation and seeking solutions.

With advice from the Debtors' Ombudsman, the aim is to resolve financial difficulties before the problem has become such that other remedies, such as a payment adjustment or bankruptcy, are needed. After processing the application, the applicant receives a summary of his/her financial situation, a credit difficulties assessment, and if possible, proposals for improvements. In some cases, the counselors assist applicants in seeking agreements with creditors, which may include, among other things, loan extensions, cancellation of late interest, loan freezing or loan modification.

If the above measures are not sufficient, applicants are advised to apply for personal adjustment or financial assistance to pay insurance for the costs of bankruptcy proceedings with the debtor's representative.

When the applications for counselling are examined, the gender distribution is quite even.

During the year, applications were processed

• male 53%

• women 47%

The largest number of applications were individual applications (1+0) or 72%.

• 418 - Total number of applications for counselling

• 509 - Total number of applications processed in advisory services in 2019

Advice in numbers

In 2019, there were:

• 37% with negative payment capacity

• average assets 5,189,016 ISK

• average debt 10.821.823 ISK

Information on applicants

The objective of the Act on personal accounting is to enable individuals in severe credit difficulties to restructure their finances and to strike a balance between debt and ability to pay so that it is realistic for the debtor to meet his obligations for the foreseeable future.

Processing of payment adjustments is carried out entirely within the office where the supervisors handle the processing of payment adjustments from the beginning of the application to the end of the case.

The application system of the Directorate is electronic and applicants do not need to submit a written consent for data collection, but such consent is granted electronically. The application is entered through island.is, either with an ice key or electronic ID.

Processing of applications for individual payment adjustment can be completed in three ways, through approval, through refusal and through the applicant himself deciding to withdraw his application.

There may be more than one reason for refusing an application for a payment adjustment.

The most common reason for refusal in 2019 was the applicant’s unclear financial situation, but in 80% of applications, unclear financial situation was one of the reasons for refusal.

Appellate Decisions

Decisions of the Debtors Ombudsman on refusing the authorization to seek payment adjustment and on cancelling the authorization to seek payment adjustment can be appealed to the Welfare Appeals Board.

In 2019, 7 decisions were made to refuse appeals, of which 5 decisions were confirmed, one was dismissed and one case was dismissed.

Applications for payment adjustment in 2019

• 348 applications

• 418 deliveries

When the applications for payment adjustment are examined, it can be seen that women are in the majority of those who apply for individual payment adjustment.

• 59% women

• 41% male

The majority of applicants were individuals with the family label 1+0 or 63%.

• 25% approved

• 50% refused

• 25% withdrawn

Payment adjustment in figures

In 2019, there were:

• 44% with negative payment capacity

• Average property 2,377,671 ISK

• Average debt ISK 7,357,928

Information on applicants

Payment Adjustment Process

Agreements for payment adjustment

After approving the application for a payment adjustment, a coordinator is appointed and the process of negotiating contracts begins.

When the creditor drafts a contract for the payment adjustment, the law on payment adjustment stipulates that the draft must ensure the maintenance of the debtor and his family and that it is realistic that he will be able to meet his obligations, restructure his finances and establish a balance between debt and ability to pay.

In 2019, 77 agreements were concluded for payment adjustment, and in 63% of agreements, 100% repayment of all contractual requirements was provided for.

The period of payment adjustment in contracts in 2020 ranged from no period to 36 months. The most common result was 24 months or in 31% of contracts.

Payment adjustments may provide for the total retention of individual claims, their proportional reduction, their maturity, their terms, their payment with a share of the instalment amount paid in certain intervals over a certain period, the change of the form of payment of claims or all of the above at once.

Various factors are considered, e.g. debt amount, family status and age, and it is the role of the depositary in consultation with the debtor to assess how a contract is best suited to meet the conditions of the Act discussed above.

In 2019, 77 agreements were concluded. Gender ratio:

• 60% women

• 40% men

Most applications were processed as individual contracts (1+0) or 62%

Contracts for payment adjustment in figures

Amendment to the Agreement

When the depositary proposes a contract between the debtor and the creditor, the objective is always that the contract is realistic and is suitable for solving the debtor's payment and debt problems. However, it is never possible to exclude that something occurs during the contract period that prevents the debtor from fulfilling the contract that was made.

If unforeseen circumstances occur during the contract period that weaken the ability of the debtor to comply with his payment adjustment agreement, the debtor may request the creditor to change the agreement.

Since 2013, the Debtors Ombudsman has been working on a procedure whereby the Debtors Ombudsman acts as a mediator for the claimant on behalf of the debtor, although the law allows the debtor to perform this role himself. Experience has shown that it is a significant burden for the debtor to perform this role himself and the office has proven better able to reach a settlement on the amended agreement in line with the ability of the debtor.

In 2019, there were:

• 16 amendments

• 11 agreements changed

• 4 Repealed Requests

• 1 amendment rejected

From the beginning, amendment has been approved in 76% of cases

The remedy consists in the applicant requesting to receive a guarantee for the cost of liquidation for bankruptcy proceedings, subject to certain conditions.

The aim is to enable individuals who have experienced significant payment problems and have unsuccessfully sought other payment solutions to claim for the change of their livestock.

The main criteria are that the applicant has significant payment problems, that the applicant cannot meet the insurance for the costs of bankruptcy and that other payment problems are not sufficient to solve the applicant’s payment problems. Similar criteria are also contained in the Act on Individuals’ Payment Adjustment No. 101/2010, which the applicant must meet in order to be authorized to seek payment adjustment.

There may be more than one reason for the rejection of an application for financial aid to cover the cost of the exchange.

In 2019, the most common reason for rejection was that the applicant did not meet the criterion of being in serious payment difficulties in Article 3(1)(a).

In 2019, 32 individuals who had received approval for financial assistance to pay collateral for the costs of bankruptcy proceedings requested that their estate be taken to bankruptcy.

At the beginning of 2020, 67 individuals had received approval for financial assistance but had not requested their farms to be subject to bankruptcy.

Applications for financial aid to cover the cost of switching in 2019 in figures

The applicants were:

• 56% male

• 44% women

The largest number of applications were individual applications (1+0) or 71%

• 153 - Total number of applications for financial assistance for exchange costs

• 32 applications approved

• 74 applications rejected

• 47 applications rejected

Other information:

• 47% with negative payment capacity

• average asset 295,935 ISK

• average debt ISK 10,830.901

Statistical information on exchange costs