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Watchdog fines Erste Bank for loan early repayment request form

Competition

The Hungarian Financial Supervisory Authority (PSZÁF) levied a HUF 10m fine on Erste Bank Hungary because a clause included in its request form for participation in an early FX mortgage repayment scheme infringed the law on the prohibition of unfair business practices, PSZÁF said on Friday.

PSZÁF had prohibited already on October 12 the bank from using in the request form a clause which wrongly alleged that clients can submit their claim for participation in the early FX mortgage repayment scheme only once by the December 30, 2011 deadline.

Erste Bank Hungary said at the time it acknowledged the resolution and immediately corrected the contents of the form.

In the current resolution PSZÁF also said the bank must inform clients who had already submitted their application that they may submit their application several times by the deadline.

Erste Bank Hungary is the second bank fined by the regulator related to the early repayment scheme.

On October 12 PSZÁF fined Austrian-owned Magyarországi Volksbank HUF 50m for using a request form which required clients to promise repayment of the difference between the discounted rate and the market rate if Hungary's Constitutional Court rules against the measure.

PSZÁF is also scrutinizing an application used by OTP Bank in which clients are prohibited from repaying their forex mortgages early by using loans from another bank, the regulator's spokesman said on October 17.

The government scheme allows early repayment of foreign currency-denominated mortgages in full and free of charges at a discounted exchange rate.

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