
Some businesses that issue so-called fast, or distance loans, have been charging for some years for faster payments to consumers, but don’t include it in their legally imposed interest rate limits. According to the program de facto of Latvian TV (LTV), the supervisory authority has already called to stop this practice, but never punished anyone.In ten years the volume of new consumer loans has doubled. In the current time in the unbanked sector there are 37 licensed companies. The turnover of the leader –
DelfinGroup – in 2023 year was more 40 million euros, which is 40% more than the year ear ear earlier. Finance Finance turnover was 35 million euros, which is one-third more than in 2022 year. IPF IPF Digital Latvia, which operates under the brand credit24.lv, has a turnover of almost 22 million. Over 10 million euros was and turnover of Extra credit, Incredit Group and VIA
SMS. To keep customers from falling into the trap of disproportionate interest rates, Same six years ago set a ceiling for their customers. Costs under the agreement cannot exceed 0.07 percent per day of the amount of the credit. It was at this time that some entrepreneurs stopped paying money slowly. In the same time people can receive money and immediately if the condition that they paid for a such service.
And clients usually need fast loans very urgently. The program de facto called the customer service centers of some fast credit companies and found out that paying the money on the same day is really more expensive. Last year six companies charged the commission for speed. AndNow this is also done
by at least three large companies and a few related brands. Finance for example, in the case of 4Finance the commission in the amount to 15% of the amount of the loan is charged by Ondo.lv, Vivus.lv and SMScredit.lv. In a written response the company
calls this an additional service, which it has introduced for economy purposes and by agreement with the supervisory authority. “The Company introduced this additional service in 2019 to optimize workforce, quality service and capabilities, while balancing these with the economic situation. The service was implemented
strictly in compliance with the current regulations and after consultation with the supervisory industry.” – said Gvido Endlers, the general director of 4finance Gvido Endlers. The voluntary customer choice and official authorization to act in this way says in the written response
and the company Extra credit: “Before introducing this additional service it was agreed with the supervisory agency, the Center for Consumer Protection, which confirms its complete compliance with the requirements of the Law.”
DelfinGroup Didzis Admidins didzis Admidins cited an example from another industry: “If I as an airline passenger want to get a determined seat on an airplane, I voluntarily pay an additional payment at the moment of purchasing a ticket.” LTV thinks the used comparison is
not totally correct, because it is an other industry, where the law doesn’t establish a maximum limit on the interest rate. Credit Companies do not include additional payment for accelerated work in the total costs of the credit and the annual
interest rate. Suspicion arises that they are by doing so they are breaking the law.As de de facto notes, last summer the Financial Industry Association filed a complaint with the Consumer Protection Center (PTAC). “This practice is unacceptable and, in general, if
it can be expressed, it compromises all financial service providers, ” Janis Brazovskis, a member of the association’s directorate . The banks refer to the recent decisions of the Court of the European Union and the Finnish Court, which considered similar cases and ruled, that such services should be included in the general calculation of the annual interest rate. Non-bank creditors, in turn, think that the legislation does not extend to this service, because it is not mandatory, not predictable and was
agreed with the supervisory agency. “There is no no fraudulent action. The actions were open, the evaluation was evaluated whether the service complies with the law or not, there were consultations with the supervisory agency. And then, after a few years, someone outside says that this is
an attempt to pass the law. I think this discussion is not appropriate, ” said the leader of the FinTech Latvia Association Tina Luse. The discussion is ready to begin with the industry representatives themselves. At least the measures, those who don’t charge for speed. “We think that the commercial practice of applying the commission for accelerated consideration of credit applications should
be evaluated negatively, ” – said LTV the leader of VIA SMS.lv Martins Magdeburgers. “To ensure a fairer environment of credit and prevent practices, that could create excessive financial burden on borrowers, it is necessary to limit the application of such commissions,” -said LTV leader IPF Digital Latvia Toms Vandans.
Agnia Milyuna, head of legal law department InCredit Group Agnia Milyuna, also agrees: “The decision of the Court of the European Union is an opportunity to introduce uniform conditions in the Latvian sector of non-bank creditors.” de facto reminds that the supervisory authority has been assessing the situation for half a year. In August last year in the response to the actions of the banks
PTAC wrote that it has changed its position, and called for entrepreneurs to stop similar practices. In addition, the idea of initiating administrative cases to protect the collective interests of
consumers was considered. But no resolution to since there is no solution.” “We have concluded that such service is unacceptable. That’s why we are conducting an in-depth
analysis, [collecting] additional data about how it affects [the industry], how much time it will need to order the system and stop similar things. Then we and we will decide on the future steps, said RTAS Director
ZaigaLiepinja, addingthatclarifyingthesituationcouldtakeanothersix months.DefactohasalreadyreportedthedifficultiesthatPTACisfacinginperformingtheobligationsimposedonit.For example, there are soundingideasoftransferringsupervisionofthenon-bankingsectortoBankLatvia.The ideais supported byMinisterofFinanceArvilsAsheradens,butMinisterofEconomyViktorValainisdoes notseethenecessityofsuchactionatthecurrentmoment.AstolddefactointheBankofLatvia,theEUhasonlythreecountries-Latvia,MaltaandRomania-wheretheprotectionofconsumers’rightsoffinancialservicesisnotinvolvedthecentralbank,northesupervisoryagencyforthefinancialservicesсектором.