On Thursday, February 26, the Ministry of Finance (MoF) submitted an informational report to the Cabinet of Ministers (CoM) for consideration, proposing to transfer the functions of licensing and supervision of consumer (non-bank) lenders, as well as the protection of consumer rights and interests in the field of financial services, to the Bank of Latvia. The objective of these changes is to introduce a unified and more efficient supervision model, reduce the administrative burden, and eliminate the duplication of functions.
“The goal of changing the supervisory authority is to establish a unified, professional, and risk-based supervision model, eliminating the duplication of functions, strengthening quality, and making public administration more efficient. The MONEYVAL assessment clearly indicates the need to ensure unified supervisory practices and more efficient use of resources. Currently, consumer lenders are supervised by three different authorities, leading to parallel inspections and divergent approaches. Transferring supervision to the Bank of Latvia means better-protected consumers, a lower administrative burden for the industry, a nearly fivefold reduction in the state fee, and professional supervision that is already implemented in the majority of European Union member states,” emphasizes Arvils Ašeradens.
Currently, lenders in Latvia are supervised by three institutions – the Bank of Latvia, the Consumer Rights Protection Centre (CRPC), and the State Revenue Service (SRS). In practice, this means that the same market participant may fall under the control of multiple supervisors, facing parallel inspections and differing requirements. The international MONEYVAL Round 6 assessment of Latvia also concluded that consumer and business credit providers are supervised by three different institutions, affecting the efficient use of resources and equal conditions for competition. Latvia has been advised to ensure unified supervisory practices and avoid the duplication of supervisory measures.
The report explains that the CRPC, while performing licensing supervision, does not conduct risk profiling or regular analysis of financial statements. This does not apply to the supervision of anti-money laundering and combating the financing of terrorism and proliferation (AML/CFT/CPF), where the CRPC operates based on a risk matrix. At the same time, MONEYVAL indicates that the CRPC's risk assessment approaches in less significant sectors should be improved, particularly regarding the evaluation of AML/CFT/CPF risks and the quality of data used. This would allow for higher-quality, risk-based supervision and a focus on market participants where risks exist. Initial assessments by the Bank of Latvia suggest that with the change of supervisory authority, the intensity of AML/CFT/CPF supervision for these market participants would decrease.
Currently, the sector supervised by the CRPC has positioned itself as efficient and fintech-oriented. The Bank of Latvia already supervises a wide range of financial sector participants, including companies that constantly develop new ways and channels of service delivery. The experience accumulated by the Bank of Latvia, its international cooperation network, and its established consultation environment will allow companies to adapt to changing conditions, providing services increasingly efficiently and in line with the latest technological solutions.
It should also be noted that by changing the supervisory authority to the Bank of Latvia, the annual state fee for industry companies would be significantly reduced (nearly fivefold), and new market participants would not have to pay for the issuance of a license. This would remove existing barriers to market entry and promote expanded competition among service providers.
Consumer credit service providers, upon falling under the supervision of the Bank of Latvia, would not be required to re-obtain a special permit (license), and currently, there are no plans to introduce prudential supervision requirements typical for credit institutions. During mutual discussions, the Bank of Latvia and industry representatives are currently working on discussing essential details of the supervisory framework to avoid a negative impact on the industry due to the change of the supervisory authority.
Given that the change of supervisory authority does not involve a revision of regulatory requirements, honest market participants have no cause for concern. The Bank of Latvia currently supervises a broad range of financial service providers with distinct requirements tailored to each sector and its operational risk, utilizing adapted information submission channels and frequencies. The Bank of Latvia's supervisory processes are currently being adapted to simplification mandates arising from both European Union (EU) and national financial market policies.
The transfer of additional functions from the CRPC to the Bank of Latvia would allow for a reduction in the number of CRPC employees, where 11 employees with a total annual salary of 390,000 euros currently perform the licensing and supervision of consumer credit service providers, including in the field of AML/CFT/CPF. This would promote the overall efficiency of public administration.
Currently, only in three EU member states – Latvia, Romania, and Malta – are non-bank lenders supervised by a consumer protection authority, while in most of the EU, this function is performed by the central bank or a financial supervisor. This confirms that transferring supervision to the Bank of Latvia would be a logical and internationally proven step.
Countries choose this model because it is the financial sector supervisor that monitors the implementation of regulatory requirements and applies corrective measures to market participants to prevent or correct systemic or widespread harm to consumers as a group. Supervisory measures are directed, among other things, toward evaluating how information is provided to the service recipient, including comparative information on products and risks, as well as promoting financial literacy. If complaint analysis reveals a trend causing large-scale harm by one or more market participants (e.g., biased information regarding financial services or aggressive advertising), the supervisory authority can effectively apply corrective actions.
Reference is also made to the G20/OECD High-Level Principles on Financial Consumer Protection, which state that financial consumer protection must be closely integrated into the regulatory and supervisory framework. Horizontal issues such as financial consumer well-being and resilience, digitalization and technological development, and sustainable finance must also be taken into account. Given the Bank of Latvia's existing broad scope of supervised financial market participants and access to a wide set of economic, market, and statistical data, as well as its ability to perform in-depth systemic risk analysis, it is capable of ensuring reasoned and evidence-based decisions.
If the non-bank lenders currently licensed by the CRPC and the protection of consumer rights and interests in the financial sector were transferred to the Bank of Latvia's supervision, several benefits for consumer rights protection could be identified, including compliance with responsible lending principles, which helps reduce excessive indebtedness and promotes public financial well-being in the long term. Furthermore, the implementation of unified and effective Anti-Money Laundering and Know Your Customer (AML/KYC) requirements would be noted, ensuring both compliance with international norms and equal treatment of clients by service providers, as well as the evaluation of contract fairness, strengthening the contractual balance between service providers and consumers. The supervision of transparency regarding interest rates, commission fees, and total credit costs is also essential to ensure that information provided to clients is understandable, comparable, and allows for informed decision-making.
At the same time, data clearly show that the non-bank sector is growing rapidly. Since 2019, the non-bank consumer credit portfolio has more than doubled, growing by an average of 16% per year—significantly faster than bank lending. This growth is accompanied by higher interest rates and increasing risks for consumers. In 2024 alone, more than 71 thousand cases were referred for out-of-court debt collection. Although the number of non-bank credit clients is smaller than those of banks, the number of complaints regarding non-bank lenders is higher, indicating elevated consumer protection challenges.
These indicators confirm the necessity not only for a unified licensing and supervision system for consumer lenders but also for strengthening supervisory quality amid the rapid growth of the industry. Concentrating supervision within the Bank of Latvia, which already performs financial market supervision and is responsible for financial stability and financial literacy, would provide the opportunity to better identify risks, timely prevent unfair commercial practices, and ensure a financial services environment that meets public interests. Although no agreement on the proposed solution was reached during the progress of the informational report, industry participants recognized in talks with the Minister of Finance that they do not conceptually object to the transfer of supervision to the Bank of Latvia, and the parties are continuing discussions on the details of the process. The MoF calls upon the CoM for a fact-based discussion to decide on the best scenario for consumers and the development of the industry.
In the event of a positive decision, the MoF plans to submit the necessary amendments to regulatory acts to the CoM in the near future and, according to the schedule of their adoption, set an acceptable transition period for the change of supervisory authority for industry companies. Simultaneously, given the discrepancies found in the information provided by the CRPC at the meeting of the Saeima Budget and Finance (Tax) Commission on February 4, 2026, regarding the financial impact of taking over the supervision function, the MoF invited the CRPC on February 13 of this year to submit information justifying the data calculation methodology, the approved source of state budget cost data, and a reference to the source of information and the time period for which the calculations were performed.
Furthermore, the MoF, while making the necessary amendments to regulatory acts regarding the change of the supervisory authority, does not plan to amend or restrict the existing requirements for consumer credit provision in the industry regulations.
The informational report is available on the Legislative Acts Portal.