To align Latvian legislation with EU requirements and ensure a level playing field for financial service providers, on Thursday, 23 July, the Saeima adopted in the final reading amendments to the Consumer Rights Protection Law. The amendments lift the ban on consumer credit advertising while introducing strict requirements governing the content and placement of consumer credit advertisements.

Until now, advertising of credit products to businesses was permitted in Latvia, whereas advertising of consumer credit products, including credit cards, to private individuals was prohibited. No such prohibition exists in other European countries, making Latvia's regulatory framework more restrictive than elsewhere.

“When this restriction was introduced, it had a clear objective—to promote responsible borrowing. However, the economic environment and the public’s level of financial literacy have developed, while a number of mechanisms strengthening borrower protection are being introduced. Therefore, the time has come to review the existing framework and strike a balance between consumer protection and competitiveness of the sector,” noted Arvils Ašeradens, Chair of the Saeima Economic, Agricultural, Environmental and Regional Policy Committee which was responsible for advancing the draft law.

According to MP Ašeradens, the amendments bring Latvia’s regulatory framework closer to European practice while maintaining a high level of consumer protection. Advertisements for credit products will continue to be subject to strict requirements in terms of content, visual presentation, and placement.

Advertisements will not be permitted to encourage irresponsible borrowing or create the impression that credit is an appropriate solution to financial difficulties. Nor may advertisements state or imply that borrowing can replace savings or improve the consumers’ standard of living. In addition, advertisements will be prohibited from emphasising that a loan can be obtained quickly and easily.

The amendments provide that any advertisement offering consumer credit must clearly and prominently include the following warning: “Warning! Borrowing costs money”. The warning must occupy at least 10% of the total size or duration of advertisement. Additionally, credit agreements may only be concluded or amended between 8.00 and 21.00.

Saeima Press Service