Latvia's Ministry of Finance has submitted a report to the Cabinet proposing that the Bank of Latvia take over the licensing and supervision of non-bank consumer lenders and the protection of consumer rights and interests in financial services. The ministry presents this as a shift to a single risk-based supervisory model that would replace the current split between the Bank of Latvia, the Consumer Rights Protection Centre and the State Revenue Service, with the aim of reducing duplicated inspections and administrative burden. The report cites MONEYVAL's sixth-round evaluation, which said supervision of consumer and business lenders by three institutions weakens efficient resource use and consistent supervisory practice. It argues that the Consumer Rights Protection Centre does not use risk profiling or regular financial statement analysis for licensing supervision, although it applies a risk matrix for money laundering, terrorist financing and proliferation financing oversight, and notes the Bank of Latvia's initial assessment that the intensity of that oversight for these firms would decline after a transfer. Existing providers would not need to obtain a new licence, no bank-style prudential requirements are planned, and the ministry said it does not intend to change the substantive rules for consumer credit. For firms, the annual state fee would fall by almost five times and new entrants would no longer pay a licensing fee. The ministry also linked the proposal to rapid growth in the sector, saying the non-bank consumer credit portfolio has more than doubled since 2019, rising by an average 16% a year, while more than 71,000 cases were sent to out-of-court debt collection in 2024 and complaint volumes exceed those for banks despite a smaller customer base. It said the proposed model has not yet secured agreement in the process so far, although industry participants have indicated they do not object in principle and discussions on implementation details continue. If the Cabinet backs the change, the ministry plans to submit legislative amendments shortly and set a transition period aligned with the adoption timetable.

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