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Wednesday 24.04.2019 | Name days: Nameda, Visvaldis, Ritvaldis
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Ministry: non-banking lenders should assess clients’ solvency more carefully

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUAlthough certain improvements have been noticed in the industry, Latvia’s Economy Ministry invites amendments to make non-banking lenders perform more careful evaluation of clients’ solvency and allow creditors exchange information with one another.

Data from non-banking lending sector, as well as inspections from the Consumer Rights Protection centre show that in total the non-banking sector’s loan portfolio in Latvia keeps gradually increasing. At the same time, the number of extended loans increases – approximately 25% of loans have delayed payments and 64% are extended. CRPC believes there are still problems with evaluation of clients’ solvency.

Economy Ministry recommends amending Consumer Rights Protection Law, providing that lenders are no longer allowed to rely solely on information provided by consumers. Instead, they will have to make sure information provided to them is trustworthy by requesting confirmation from state or private registries (SRS, VSAA, Credit Information Bureau or other reliable information sources).

«We’ve noticed that consumers often provide untrue information about their income,» admits the ministry, adding that in accordance with current regulations, lenders have to make sure information from consumers is reliable and refuse providing a loan if results of the solvency assessment turn out unfavourable for consumers. However, regulations do not provide any specific requirements in relation to the way lenders have to ascertain the information provided by consumers in relation to their solvency. Because of that, lenders can decide on their own how deeply to assess consumers’ solvency.

Economy Ministry also supports amending Consumer Rights Protection Law to allow non-banking lenders the option to exchange information regarding clients’ debts. «By exacting aforementioned changes to the law, we will make sure loans are not provided to consumers who cannot afford paying them back, as well as improve the quality of solvency evaluation. Solvency checks will help assess consumers’ income and debts, reduce grey economy’s influence over non-banking lending sector, provide all lenders equal opportunity to receive information needed for assessment of solvency,» the ministry mentioned in its released statement.

The ministry reports that the proposed amendments are currently viewed by Saeima committee and may soon be submitted for a final vote to the parliament, adding that it is too soon to speculate on support from deputies.


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