Central Bank Cracks Down on Financial Institutions Using Unfair Practices
In an effort to strengthen public confidence in Hungary’s financial system, the Magyar Nemzeti Bank (MNB) has been taking a tough stance on financial institutions that engage in unfair practices.
Consumer Protection Policy
The MNB’s consumer protection policy is built around three main pillars:
- Efficient Supervision: The bank monitors compliance with consumer protection provisions of Hungarian law and opens proceedings when necessary.
- Efficient Enforcement of Sanctions: If an infringement is found, the MNB can impose a range of sanctions, including issuing warnings, ordering the cessation of illegal activities, prohibiting further infringements, and imposing fines.
- Protection of Defenceless Groups in Society: The bank supervises both Hungarian- based and cross-border fintech service providers, cooperating closely with foreign authorities when necessary.
Common Unfair Practices
In recent years, common practices that have attracted the attention of the MNB include:
- Unilateral fee increases
- Misinforming consumers about fintech services
Fintech Services
Fintech services, which operate primarily on digital platforms, have increased cybersecurity risks due to the large amounts of user data they process. The MNB emphasizes the importance of transparency in financial services, including requiring foreign-based service providers to make information available in Hungarian.
Future Changes Ahead
Climate change, sustainable finance, and green economy are expected to have a significant impact on Hungary’s legal and regulatory policy over the next few years. Some key changes include:
- Sustainable Finance: The integration of environmental, social, and governance (ESG) criteria into financial decisions.
- Green Financial Services: Regulating green financial services, green bonds, and green credits.
- Cybersecurity and Digitalization: Creating a supportive, consumer-friendly, and stable environment for digital financial services.
Next Steps
The MNB is working to ensure that the domestic system of financial intermediation supports environmental sustainability. The bank has published a report on the performance of the financial sector in its Green Financial Report and is expected to make further changes in response to these emerging trends.