From €250,000 to €2,500: What's Next for Consumer Lending in Latvia?
By 20 November, lenders, online shops and car dealers each need to answer one question: does the way we offer credit or deferred payment still comply with the law?
The fee is the headline: today the state fee for issuing a non-bank consumer lending licence is €250,000, but from 1 January 2027, applicants will instead pay €2,500 for their application to obtain the licence. That is a substantial cut in the cost of getting in. It is not a cut in capital or compliance requirements, and for lenders and retailers offering credit, fees are only part of the story.
Two dates set the clock. From 20 November 2026, consumer credit changes will bring broader creditworthiness requirements, a ban on unsolicited credit and registration for certain large seller-provided pay-later businesses. From 1 January 2027, Latvijas Banka will take over non-bank consumer lending licensing and supervision from the Consumer Rights Protection Centre (PTAC).
For many businesses, the question is less “how much does a licence cost?” and more “what needs to change before the next customer borrows or buys on credit?”. This article explains who is affected and what to review in payment models, customer checks and contracts.
What Changes First: 20 November 2026
The first deadline is 20 November 2026, when a separate set of consumer credit amendments applies, ahead of the supervisory transfer. Lenders, intermediaries and retailers should assess which requirements and exemptions apply to their particular products and activities.
No Request, No Credit
From 20 November 2026 credit may not be granted unless the consumer has previously requested it and given clear consent. Lenders should review how they activate credit facilities and increase limits. A pre-approved offer is not necessarily the same as granting credit; the relevant question is whether credit is actually granted without the required request and consent.
Consumers will also be able to record that they do not wish to receive credit in a credit bureau database. When assessing creditworthiness for new financing, lenders must check the credit bureau databases for this mark and take it into account. This adds control to the applicable assessment process.
Pay-Later Offers and Intermediaries: Who Has to Register
Not every “pay later” offer is treated the same way. The new regime distinguishes a seller's own deferred-payment service from third-party lending commonly marketed as buy now, pay later (BNPL). In plain terms, the seller lets the customer receive its goods or services now and pay later. No other lender is involved, and there is no interest or additional charge apart from a limited late-payment charge.
A seller's own service is exempt from the special consumer lending licence requirement, but large enterprises must register with Latvijas Banka unless they provide only arrangements meeting the statutory short-term exemption. The general period is full payment within 50 days of delivery or service provision. For a large enterprise offering the service through online distance contracts, the exemption requires full payment within 14 days and no transfer of the resulting claim to a third party.
For example, a large retailer offering its own qualifying deferred-payment service over 30 days through an online distance contract would fall outside the 14-day exemption and would need to register. A smaller retailer offering the same payment term is not subject to this registration requirement, although other consumer-credit obligations may still apply. The enterprise's size, financing model and other statutory criteria matter.
For large enterprises that must register, the document-review fee is €1,500 and annual supervision fees apply to them from 1 January 2027. Smaller enterprises are not subject to this registration requirement, but must still comply with the consumer protection rules applicable to their services.
Registration is not only a matter for finance companies. From 20 November 2026, the registration requirement also extends beyond mortgage credit intermediaries to other persons who meet the statutory definition of a credit intermediary or its representative. A car dealer or electronics retailer may fall within that definition if, for agreed remuneration, it offers credit agreements, concludes them for a lender or carries out relevant preparatory work. However, merely introducing a consumer to a lender, without remuneration, should not by itself be enough to make someone a credit intermediary under the amended definition.
Creditworthiness Checks in More Cases
Creditworthiness means the customer's ability to repay, not simply whether they have repaid past loans. These checks will extend to short-term loans repayable within three months with only insignificant charges, and to seller-provided deferred-payment arrangements outside the relevant exemption.
Assessments must use accurate, verified information about the consumer's income, expenses and other financial and economic circumstances, to the extent necessary and proportionate to the credit's type, duration, amount and risks. Credit history alone is not sufficient. Automation will remain possible, but with a safeguard. Where a decision is automated, consumers will be able to request human involvement and an explanation of the outcome. In practice, lenders will need both the data to support each decision and the people to review it.
Higher Stakes for Contract Errors and Arrears
Small gaps in a contract can have long consequences. The right to withdraw lets a consumer leave a credit agreement within a set period, subject to the applicable repayment obligations. For agreements covered by that right, failure to provide the required contract terms and information can extend the withdrawal period to 12 months and 14 days after the agreement is concluded.
If information on whether the withdrawal right exists and the conditions for exercising it has not been provided at all, the law sets no time limit for withdrawal. This makes accurate contract templates and a reliable information-delivery process important.
When a customer falls behind, the lender must exercise reasonable forbearance before starting debt recovery or enforcement, taking the consumer's individual circumstances into account. In practice, this means reasonable steps to help the customer repay. Measures may include extending the term or deferring payments. The law does not require repeated offers of forbearance unless justified by the circumstances.
From 1 January 2027: Latvijas Banka Takes Over
On 1 January 2027, lenders will get a new supervisor: licensing and supervision of non-bank consumer lenders, together with consumer protection supervision in financial services, moves from PTAC to Latvijas Banka. Existing PTAC licences and credit intermediary registrations remain valid.
Latvijas Banka has stated that it intends to take a systemic approach to supervision, addressing risks rather than focusing only on complaints and breaches after they occur. Its forthcoming rules and supervisory practice will show what this means for individual lenders.
Latvijas Banka will issue detailed rules within its statutory remit by 31 December 2027. The specified existing Cabinet regulations will continue to apply during the transition, subject to the exceptions set out in the law, until the relevant Latvijas Banka rules take effect and no later than that date.
Open-Ended Licences and Ongoing Obligations
Consumer lending licences are already issued for an indefinite period. The amended law retains that approach and gives Latvijas Banka rule-making powers over licensing, suspension, reinstatement and revocation. Lenders must continue to comply with applicable requirements while their licences are valid and while servicing their existing loan portfolios. In short: obtaining the licence is only the start, as the business must remain compliant for as long as it holds one.
Cheaper Entry and Supervision Fees Tied to Portfolio Size
Today
- Licence: €250,000 state fee
- Annual supervision fee: €55,000
From 1 January 2027
- Application review: €2,500
- Annual fee: €5,000, plus up to 0.033% of the average consumer loan portfolio for each calendar quarter (in 2027–2029 total annual payment capped at €55,000 and at €100,000 from 2030).
The new supervision fee combines a fixed annual amount with a component based on the loan portfolio, meaning the value of loans held by the lender, subject to an annual cap. In practice, smaller portfolios may attract lower supervision fees than under the current €55,000 flat fee, but larger lenders could pay more from 2030, depending on the applicable rate and portfolio size.
Do not mistake a cheaper application for a cheaper start-up: the statutory minimum paid-up share capital of €425,000 remains in place for lenders subject to this requirement. Latvijas Banka may also set detailed capital and other licensing requirements within its statutory powers.
Open Reporting and Personal Fines for Licensing Breaches
From 1 January 2027 anyone may report suspected or actual breaches of the relevant financial-services consumer protection rules to Latvijas Banka. The law requires a reporting system with safeguards for personal data and the reporting person's confidentiality, subject to legally required disclosure. In practice, this means customers, employees and competitors can all bring suspected breaches to the regulator’s attention.
Penalties can reach individuals as well as companies. From 1 January 2027, providing consumer credit without a required licence, or continuing after suspension or revocation, may attract a fine of €2,500 to €75,000 for a legal person. A natural person, including a board member, may face a fine of €280 to €2,000 and, where applicable, a prohibition on holding specified positions. These sanctions relate to the specified licensing breaches, rather than to every compliance issue.
What This Could Mean for the Market?
Cheaper entry does not automatically mean an easier run. The reforms reduce the regulatory entry fee and change supervision and operating requirements, while their wider market effects remain to be seen.
More competition. Lower application fees may make entry more accessible to some prospective lenders. Whether this leads to more competition or lower consumer prices will also depend on funding, capital requirements, demand and the cost of compliance.
Licensing and supervision. A lower application fee does not remove the need to meet licensing requirements. Applicants and existing lenders should monitor Latvijas Banka's forthcoming rules and guidance rather than assume that either a lighter or a more demanding review is guaranteed.
New decisions for retailers. Retailers should review their payment periods, enterprise-size classification, assignment arrangements and use of third-party lenders to determine the applicable requirements. Shortening a payment period or partnering with a lender does not automatically remove every regulatory obligation.
Operational readiness. Broader assessments, information duties and forbearance procedures may require changes to systems, contracts and staffing. The cost and scale of those changes will depend on each provider's existing processes and business model, and the changes are likely to make each loan more expensive to issue.
If you would like to check how the new rules apply to your product, contracts or licence application, feel free to get in touch with the Venture Faculty team.
The information in this article is general and not intended as legal advice. It is for information purposes only and does not reflect any particular situation or circumstances and should not be relied upon as a source of professional advice.
Author: Jēkabs Senkāns, Lawyer at Venture Faculty
