Banking Association appeals to President on settlement law

Issues

The Hungarian Banking Association has asked the President of the Republic not to sign legislation on settlement due borrowers from banks, but send it to the Constitutional Court for review.

The association noted that borrowers' relief legislation – legislation that laid the foundation for the settlement law – was in the process of being reviewed by the Constitutional Court after lower court referral, and that the matter was inseparable from the law on settlement.

The association said it was asking the President to send the law to the Constitutional Court in the interest of legal security and legislating in a predictable manner. The association said the law on settlement established new regulations for retail lending with retroactive effect and presented an "enormous burden" for the banking sector.

The association stressed that banks would still implement settlement to the letter of the law. The borrowers' relief legislation requires lenders to pay refunds for using exchange rate margins when calculating repayments on foreign currency-denominated loans and for making unilateral changes to both FX and forint loan contracts.

The settlement law outlines how and when the compensation will be paid, although the National Bank of Hungary is in charge of the details of the process. The parliamentary group of the governing Fidesz party on Monday called on President Ader to withstand "the pressure exerted on the President by agressive methods by banks" and sign the settlement legislation into law.

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