Government supports transferring functions of licensing and supervision of non-bank lenders to Bank of Latvia

RIGA - On Tuesday, the government supported a proposal by the Finance Ministry to transfer licensing and supervision of consumer (non-bank) lenders, as well as protection of consumer rights and interests, to the Bank of Latvia.

Economics Minister Viktors Valainis (Greens/Farmers) stressed during the government meeting that the Economics Ministry did not support transferring supervision of non-bank lenders to the Bank of Latvia. However, the Greens/Farmers do not have a majority in the government, therefore further process of the reform will be decided by Saeima.

The non-bank lending sector grew 16 percent in 2025, but this development pace may be affected by the proposed changes, as the Bank of Latvia might require large volumes of documents from non-bank lenders, explained Valainis.

The Finance Ministry informed that, in discussions with representatives of the fintech sector, Fintech Latvia association and the Bank of Latvia, an agreement was reached in principle on gradual transfer of the sector's supervisory functions to the Bank of Latvia.

To ensure a clear and predictable transition to the new supervisory model, a transitional period until January 1, 2028, has been proposed. During the transition period, starting from 2027, the Bank of Latvia will carry out supervisory functions using guidelines developed by the Consumer Rights Protection Center, while from 2028 supervisory functions will be fully performed by the Bank of Latvia.

Prime Minister Evika Silina (New Unity) emphasized that this was only a report on the proposed reform, and that a draft law had not yet been prepared or submitted to the government. She also acknowledged that the Greens/Farmers did not support the reform.

The aim of the changes is to introduce a unified and more efficient supervisory model, reduce administrative burden, and eliminate duplication of functions, according to the Finance Ministry's report approved by the government on Tuesday.

The government supported transferring the functions of registration, licensing, and supervision of consumer loan providers, which currently receive special permits (licenses) from the Consumer Rights Protection Center, to the Bank of Latvia.

The Bank of Latvia will oversee consumer protection in financial services provided in Latvia by entities supervised by the Bank of Latvia or by European Union supervisory authorities in cooperation with the Bank of Latvia, as well as entities registered in other European Economic Area countries.

The Bank of Latvia will also supervise advertising and unfair commercial practices related to non-bank lenders' services.

The Finance Ministry, in cooperation with the Bank of Latvia, the Economics Ministry, and the Justice Ministry, has been tasked with preparing the required amendments by May 31, 2026.

Finance Minister Arvils Aseradens (New Unity) said that the goal was to create a unified, professional, and risk-based supervisory model, eliminate duplication of functions, improve quality, and increase public administration efficiency. The Council of Europe's Moneyval assessment also highlights the need for unified supervision and more efficient use of resources, said Aseradens.

Currently, consumer lenders are supervised by three institutions - the Bank of Latvia, the Consumer Rights Protection Center, and the State Revenue Service - with overlapping inspections and differing requirements.