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Saeima to consider amendments obliging lenders to make sure potential borrowers are able to repay their loans
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    Saeima to consider amendments obliging lenders to make sure potential borrowers are able to repay their loans

    RIGA, June 14 (LETA) - Saeima will consider amendments to the Credit Institution Law and Consumer Rights Protection Law, which stipulate that lenders - credit institutions as well as non-bank financial institutions - will have to make sure that potential borrowers earn enough money to be able to repay their loans.

    The amendments were submitted by ruling coalition MPs.

    Unity said in a statement to the media that the amendments were meant to put an end to irresponsible lending practices. According to the amendments, the Credit Information Bureau will have all the necessary information on potential borrowers' solvency - their employers, income levels, existing liabilities and past credit history. Credit institutions as well as non-bank financial institutions will have to submit all the necessary information to the Credit Information Bureau.

    As reported, the Consumer Rights Protection Center checked 16 lenders in 2017, ascertaining different violations on all these lenders' part. For instance, the lenders issued loans even though they knew that the borrowers, given their incomes, would probably be unable to repay the loans.

    Saeima also forwarded to committees amendments proposed by the Latvian Association of Regions, which put a cap on interest rates that consumer loan companies charge on payday loans.

    "Payday loans are one of the main reasons why shadow economy exists in Latvia. People who are heavily in debt are forced to ask their employers to pay them under the table, so debt collectors would not know how much they make," said MP Edvards Smiltens (Latvian Association of Regions). "Payday loans plunge people further into debt, limiting their opportunities to stay in Latvia," he added.

    • Published: 14.06.2018 13:39
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