‘Fair banks’ bill to lock rates for loans

Competition

A bill on the so-called "fair banks" to be submitted by the government, would lock interest rates for loans maturing under three years and require lenders to use an indicator, approved by the National Bank of Hungary, to calculate rate changes for loans with longer terms, Justice Minister László Trócsányi said today.

The bill would require banks to inform borrowers of interest rate rises 90 days before they come into effect and give the borrower the opportunity to cancel the contract free of charge, Trócsányi said. The minister believes that the measure would encourage competition among banks.

The bill is also expected to establish stricter rules for informing clients of lending products, regulating even the colors used to display products. It would require a waiting period of seven working days before banks can sign contracts with borrowers, allowing sufficient time to assess the matter or consult with another party.

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