Changes Awaiting Those Looking to Take Out a Loan in Latvia?

On Tuesday, the government approved the proposal from the Ministry of Finance to transfer the function of licensing and supervision of consumer or non-bank creditors to the Bank of Latvia, as well as the protection of consumer rights and interests in the financial services sector.

Economy Minister Viktor Valainis (Union of Greens and Farmers, UGF) emphasized at the government meeting that the Ministry of Economy does not support the transfer of supervision of non-bank creditors to the Bank of Latvia. The UGF does not have a majority in the government, so the further direction of the reform will be determined by the Saeima.

Valainis noted that over the past year, the non-bank lending sector has grown by 16%, and expressed concern that with the change of the supervisory authority, this development could be halted, as the Bank of Latvia may request a large number of various documents. Valainis also emphasized that the issue of the "budget gap" created by this reform has not been resolved, and the Ministry of Finance has not proposed a solution to this problem.

During discussions with representatives of the financial technology industry, the association "Fintech Latvija," and the Bank of Latvia, a conceptual agreement was reached on the gradual transfer of the function of supervising consumer loans to the Bank of Latvia, the Ministry of Finance reported.

A transitional period until January 1, 2028, is planned. During the transitional period starting in 2027, the Bank of Latvia will perform supervisory functions, applying the recommendations developed by the Consumer Rights Protection Center (CRPC), and from 2028, supervision of consumer loans will be fully transferred to the Bank of Latvia.

Prime Minister Evika Silina stated that this is only an informational message about the planned reform, and the draft law has not yet been prepared and submitted to the government.

Currently, the supervision of non-bank creditors is handled by the CRPC.