Banks, Financial Services, Latvia

The government today supported the Economics Ministry's amendments to the Regulations Regarding the Procedures by Which a Special Permit for the Provision of Consumer Credit Services Is Issued.

The amendments increase the state fee for licenses issued to non-bank lenders from EUR 71,140 to EUR 250,000, while the annual fee for supervision of providers of lending services will be raised from EUR 14,225 to EUR 55,000.

The new requirements will enter into force on January 1, 2020. The Economics Ministry estimates that the state budget will collect an extra EUR 3 mln as a result.

The Alternative Financial Services Association of Latvia previously urged the government not to support the Economics Ministry's proposal to increase fees for non-bank lenders.

"Like the Competition Council, we believe that the disproportionate increase in fees proposed by the Economics Ministry can significantly limit the number of market players, forcing smaller players to leave the market or merge with the larger ones. If the state fee is raised to a quarter of a million, it is clear that no new companies will enter the market," said the association's head Gints Aboltins.

The association reminds that the latest amendments on regulations on the non-bank lending industry came into force this past July, limiting the maximum annual interest rates on loans.

"Following the recent legislative changes, several small players have already left the market. I predict that some lenders will not renew their licenses in December, as not all companies will afford such cost increases. If the government suggests to increase non-bank lenders' costs, the rules on banks also need to be revised so we could have at least a theoretical opportunity to compete," Aboltins said.