Latvian payday loan firm 4Finance shut down in Lithuania

The payday loan company 4Finance, operating with VIVUS and SMSCredit brands in Latvia, on Monday lost the right to give loans in Lithuania. The ban, announced by the Bank of Lithuania, is related to the company inappropriately estimating the clients' ability to pay back, reported Latvian Television Monday.

In Latvia too payday loans - small, short-term loans with high interest rates - are still sometimes given to people who can't pay them back.

Lithuanian authorities are reluctant to comment on the exact violations of 4Finance, saying that the probe is ongoing. Lithuanian officials only wanted to communicate with Latvian Television in writing.

Director of Supervision Service at the Bank of Lithuania Vytautas Valvonis wrote that 4Finance had repeatedly violated credit law in Lithuania and didn't abide to requests by the authorities. 

An investigation, started in 2015, showed that the company's violations had a systematic character and that persons who shouldn't be able to take out loans were able to continue borrowing.

4Finance is the largest payday loan firm in Lithuania with a market share of 37.8%. According to Chief Executive Officer at 4Finance Kieran Donnelly, the company is trying to solve the problems with the authority in a constructive manner and hasn't turned to court yet.

The Latvian Consumers Rights Protection Center (PTAC) said that a few years ago 4Finance was fined for similar violations, but the company had solved the problems. However it cannot be said that the situation has become significantly better as 'bad loans' are more prevalent with this type of credit. 

"Free loans [loans with no interest] are a big problem. At first it's a good idea but when you extend the loan many times it becomes a very non-free credit," said the head of the PTAC Baiba Vītoliņa.

A number of law amendments will come into force next year Latvia, limiting the maximum interest rate and late fees for loans.

Seen a mistake?

Select text and press Ctrl+Enter to send a suggested correction to the editor

Select text and press Report a mistake to send a suggested correction to the editor

Related articles
Most important

Please be aware that the LSM portal uses cookies. By continuing to use this site, you agree that we may store and use cookies on your device. Find out more

Accept and continue