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PSzÁF finds banks in breach of code of conduct

Financial market regulator PSzÁF on Wednesday said it found in an investigation that bank staff gave potential borrowers verbal information that went against principles in a code of conduct in several instances.

PSzÁF started the investigation at 30 retail lenders at the end of March to determine whether banks were holding to the code - signed by more than a hundred financial institutions in the autumn - in their verbal communications with borrowers.

PSzÁF said it would levy fines as a result of the investigation, if necessary.

PSzÁF may fine institutions that breach the code up to HUF 2 billion. PSzÁF is allowed by law to levy fines if it establishes deficiencies or offences against the law prohibiting unfair business practices.

PSzÁF has so far visited twelve banks as part of the investigation: Aegon Magyarország Hitel, Allianz Bank, Budapest Bank, CIB Bank, Credigen Bank, Erste Bank, K&H Bank, MKB Bank, OTP Bank, Raiffeisen Bank, UCB Ingatlanhitel and UniCredit Bank Hungary.

Financial institutions' practice of informing clients has improved because of the code of conduct, PSzÁF said. Financial products are now easier to compare and bank staff know about constructions in greater detail. But there are still shortfalls in bank staffs' verbal communication: some staff did not inform potential borrowers of risks, such as in the case of loans combined with saving instruments, and staff at several bank branches gave clients incorrect information on matters such as the possibility of making unilateral changes to contracts.

Appropriate communication of information to clients by bank staff depends first of all on a sufficient level of training for staff, PSzÁF said.

PSzÁF will report on the results of the investigation when it is completed. It will continue to use test purchase exercises to determine whether banks are sticking to the code. (MTI-Econews)