Constitutional Court rejects complaints regarding exchange rate margins

Issues

Hungaryʼs Constitutional Court today said that provisions in borrowersʼ relief legislation declaring banksʼ practice to use exchange rate margins when calculating (re)payments on FX loans did not go against the fundamental law, Hungarian news agency MTI reported.

Three financial institutions and one private individual borrower had asked the court to review the law in October.

The Constitutional Court said that the ban on retroactive legislation cannot serve as a ground to leave the unfair, therefore invalid, contractual provisions in contracts made on mass in the past, and, consequently, the obligations of debtors, unchanged under any circumstances.

The borrowersʼ relief legislation approved in the summer of 2014 requires lenders to compensate retail clients for using exchange rate margins when calculating repayments for foreign currency-denominated loans and for making unilateral changes to both FX and forint loan contracts.

Banks were allowed legal recourse regarding the unilateral changes to contracts.

The Constitutional Court had rejected complaints regarding the provisions in borrowersʼ relief legislation prohibiting unilateral changes to loan contracts already in November 2014.

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