The Ministry of Economics and the industry are against the Ministry of Finance. The bone of contention is the question of who should control the non-bank sector in the future.
“Why fix what isn’t broken?!” asks the logical question posed by the CEO of the Latvian Confederation of Employers, Kaspars Gorkšs. This essentially rhetorical question has also arisen among other non-governmental organizations, experts, and even the Ministry of Economics, which categorically opposes the hasty 'reform'. Moreover, this 'reform' has once again divided the ruling coalition. The 'Progressives' party has expressed support for it, while the 'Green Farmers' party is against it. The 'New Unity' party has not yet stated its position, but it seems inclined to support the 'reform'.
The proposal from the Ministry of Finance involves taking the function of supervision over the non-bank sector (financial companies engaged in various forms of consumer lending) away from the Consumer Rights Protection Center and transferring it to the Bank of Latvia, which, as is known, oversees commercial banks.
Finance Minister Arvils Ašeradens, whose department is promoting this 'reform', ardently supports this initiative. “I believe this is one of the things that should have been done a long time ago. This non-bank segment is an integral part of the financial sector. In fact, non-bank lending came under the supervision of the Consumer Rights Protection Center because there was really nowhere else to put it (the non-bank sector — ed.),” stated the finance minister in an interview with TV-3.
For its part, the non-bank sector association sees the 'reform' as the handiwork of commercial banks, i.e., competitors. “Initially, this reform was initiated and started by an association representing commercial banks in such a political environment. It is natural that the industry is cautious about a reform proposed by a competing sector,” noted the head of the FinTech Latvija association, Tina Lūse.
The sharpest criticism came from the Ministry of Economics, which includes the Consumer Rights Protection Center. The Ministry of Economics considers this 'reform' hasty and, in general, unnecessary — the Consumer Rights Protection Center is quite capable of overseeing the non-bank sector, which has been actively developing and offering lending services to businesses and residents in the regions, which is extremely important for the balanced development of the country. The Ministry of Economics criticized all sections of the information report from the Ministry of Finance, which justifies the need for the 'reform'.
The Confederation of Employers has reached similar conclusions — about the hastiness and even the unnecessary nature of the 'reform'. “The Latvian Confederation of Employers has always supported the reduction of bureaucracy in the public sector, and also conceptually supports the direction towards creating unified standards and simplifying supervision in the non-bank sector; however, the proposed solution raises concerns and, according to available data, does not contribute to achieving specific goals — it will not help reduce the administrative burden and simplify supervision over the non-bank sector.
The information report lacks a clear justification that institutional redistribution in itself will improve the quality of supervision or reduce the administrative burden on industry participants. Previous experience shows that the lending process can become even more complicated. Similarly, without a clear assessment and plan, reorganizations have been carried out in other sectors, and unfortunately, they have not been successful. There are many problems in our country that need improvement, but this is not the sector where hasty changes are needed,” states the letter to the government from the Secretary General of the Latvian Confederation of Employers, Kaspars Gorkšs.
