This 'dangerous' credit operation: The ruling parties failed to agree on… a completely unnecessary reform 0 10

This 'supervisory' saga began last year when the Ministry of Finance proposed to 'take away' the function of supervising financial companies from the Consumer Rights Protection Centre and transfer this function to the Bank of Latvia.

The most intriguing aspect of this situation is that the existing system satisfied everyone — both the supervisory authority, namely the Consumer Rights Protection Centre, and the consumers themselves, namely the clients of the non-bank sector, as well as the non-bank sector itself. There were and are no problems with monitoring the operations of financial companies — moreover, the Consumer Rights Protection Centre acts strictly when necessary and imposes huge fines on non-bank companies for various violations.

Nevertheless, reportedly at the behest of banks, which see the non-bank sector as their direct competitors, the Ministry of Finance initiated the reform process. Both the Consumer Rights Protection Centre and the Ministry of Economics, which oversees this Centre, as well as the Fintech Latvia association, which includes non-bank lenders, categorically opposed this 'reform'. The Ministry of Finance was forced to slow down the promotion of the initiative and even start a dialogue with the industry and other agencies that expressed dissatisfaction with the 'reform'. However, during the nearly three months of dialogue, the Ministry of Finance failed to convince opponents of the necessity of the 'reform', and most importantly — no answer has yet been given to the key question: what is the benefit (advantage) of such a 'reform'?

The lobbyists of this 'reform', understanding the 'vulnerability' of this 'reform', tried to reduce their rhetoric to the need to 'rein in' companies that issue quick loans. But the reality is that only a small part of non-bank lenders deals with quick loans — the largest non-bank lenders do not issue quick loans at all, instead offering mortgages, business financing, and leasing.

In any case, 'New Unity' and 'Progressives' ultimately sold the reform project, and the corresponding information report from the Ministry of Finance will be reviewed at today's Cabinet meeting. The 'Green Farmers' continue to oppose it, and there is a high likelihood that this pseudo-reform will get stuck in the Saeima, as most opposition representatives are critically inclined. By the way, the Fintech Latvia association proposed a compromise yesterday in the form of a longer transition period — until January 1, 2028, rather than until January 1 of next year, as the Ministry of Finance wants. We will see how this 'credit' operation ultimately ends.