Published: 19.01.2024.
In general, Latvian credit institutions comply with the regulation of the basic account set out in the Payment Services and Electronic Money Law, however, there is also room for significant improvements in this area – this is what the Bank of Latvia has concluded, summarizing the results of the off-site assessment of opening and maintaining a consumer’s basic account in Latvian credit institutions.
A basic account is a type of payment accountwhich intends to provide the consumer – a natural person who has a legal basis to stay in the territory of the European Union, as well as a person who does not have a residence permit, but whose deportation from Latvia is not possible according to the laws and regulations of the Republic of Latvia – access to a range of basic payment account services.
The Bank of Latvia has assessed the compliance of the basic account service provided by credit institutions and Latvian branches of credit institutions of member states with the provisions of the Law on Payment Services and Electronic Money. In general, it was concluded that the basic account service of a credit institution includes such services as are available in the specific credit institution. The fee for maintaining the consumer’s basic account is determined in accordance with the law, and credit institutions have placed information about the basic account on their websites and customer service centers. In addition to the above, credit institutions provide the consumer with the opportunity to initiate, amend or withdraw payments.
However, evaluating the complaints received related to the opening and maintenance of the consumer’s basic account and the explanations given by the credit institutions, the Bank of Latvia has concluded that the credit institutions have not clearly defined the criteria in the field of money laundering and prevention of terrorism and proliferation financing (NILLTPFN), which justify the refusal to open a basic account or termination of the standard contract.
Latvijas Banka draws attention to the fact that in 2020, in cooperation with the Consumer Rights Protection Center and the Latvian Financial Industry Association, it prepared an explanation for credit institutions on the provision of the basic consumer account service. It states that, taking into account the limited range of services of the basic account and the right of every person to receive the resources necessary for the provision of basic needs, the risk in the area of NILLTPFN should be assessed in the context of opening a basic account and the services used within the basic account.
The Bank of Latvia has prepared recommendations, which also include instructions for credit institutions to create special forms intended for opening a basic account, accurately and reasonably indicating the information to be submitted about the potential client’s planned sources of income and planned expenses, which the credit institution must evaluate in the context of the identified risks, thus spending less time evaluating the submitted information according to the actual conditions and the identified risk of the offered services, rather than basing the evaluation on general assumptions and probabilities.
Credit institutions must, on their own initiative, provide consumers with information about the availability of the consumer’s basic account, if it is not possible to offer a standard service, and must also work on technical solutions to be able to set individual limits or other restrictions, thus reducing the consumption of both the client’s and the credit institution’s resources.
Latvijas Banka has sent an individual assessment to each credit institution and provided instructions on improving the basic account service, while it is planned to discuss the assessment conclusions with the Consumer Rights Protection Center in the near future.
It has already been announced that the availability of financial services is one of the supervision priorities of the Bank of Latvia, so these aspects are given increased attention in the supervision process.
2024-01-19 08:08:38
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