On Tuesday, the Latvian government approved a proposal from the Ministry of Finance to transfer the licensing and oversight functions of consumer or non-bank lenders to the Bank of Latvia, alongside consumer protection measures in the financial services sector. Minister of Economics, Viktor Valainis from the political party ZZS, emphasized during the government meeting that his ministry does not support this handover of oversight to the Bank of Latvia. However, he noted that since ZZS lacks a majority in the government, the further progression of this reform will be determined by the Parliament (Saeima).

Valainis raised concerns about the non-bank lending sector, which has grown by 16% over the past year, stating that the shift in supervision could halt this development as the Bank of Latvia might require a substantial volume of documentation. Additionally, he pointed out that there has not yet been a solution for the 'budget gap' that this reform may create, criticizing the Finance Ministry for not providing a remedy for it. In discussions with representatives from the fintech sector, the Fintech Latvia association, and the Bank of Latvia, a conceptual agreement was reached regarding moving forward with the reform despite internal disagreements.

This move reflects the government’s commitment to enhancing the regulatory framework around financial services while also indicating the complexities involved, particularly around maintaining the growth of the non-bank lending sector. As various stakeholders voice their concerns, including the potential repercussions on service providers, the Saeima's subsequent decisions will be crucial in shaping the future of consumer lending oversight in Latvia.