Opinion of the European Central Bank of 10 October 2014 on further rules applicable to specific consumer loan contracts (CON/2014/72)
Date: 2014-10-10
Institutions: European Central Bank
Subjects: Hungary, alternative dispute resolution, consumer credit, consumer protection, exchange rate, financial stability, interest, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 10 October 2014 

on further rules applicable to specific consumer loan contracts 

(CON/2014/72) 

Introduction and legal basis 

On  12  September  2014  the  European  Central  Bank  (ECB)  received  a  request  from  the  Hungarian 

Ministry  of  the  National  Economy  for  an  opinion  on  a  draft  law  on the  rules  applicable  to  specific 

consumer loan contracts (hereinafter the ‘draft law’). 

The  draft  law  was  adopted  by  the  Hungarian  Parliament  on  24 September 20141  following 
amendments2. The ECB has adopted its opinion based on the draft law submitted for consultation. 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on 

the  Functioning  of  the  European  Union  and  the  third  and  sixth  indents  of  Article  2(1)  of  Council 
Decision  98/415/EC3,  as  the  draft  law  relates  to  the  Magyar  Nemzeti  Bank  (MNB)  and  to  rules 

applicable  to  financial  institutions  insofar  as  they  materially  influence  the  stability  of  financial 

institutions  and  markets.  In  accordance  with  the  first  sentence  of  Article  17.5  of  the  Rules  of 

Procedure of the European Central Bank, the Governing Council has adopted this opinion. 

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Purpose of the draft law 

1.1  As  referred  to  in  Opinion  CON/2014/594,  the  Hungarian  Supreme  Court  delivered  a  uniform 
decision5  outlining  the  basic  parameters  of  certain standard terms  that  could  be prescribed  by 

Parliament  for  inclusion  in  consumer  loan  contracts  entered  into  by  natural  persons  and 

denominated in forint or in foreign currency.  

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4  

5  

Law XL of 2014, Published in Magyar Közlöny No 137/2014. 
See amendments Nos T/1272/4 and T/1272/6, available on the Hungarian Parliament’s website at www.parlament.hu. 
Council  Decision  98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
Opinion  CON/2014/59  on  new  general  measures  stemming  from  the  Supreme  Court’s  decision  on  consumer  loan 
contracts. All ECB opinions are available on the ECB’s website at www.ecb.europa.eu. 

Uniform Decision 2/2014 of the Supreme Court of 16 June 2014. See also Decision 6/2013 of the Supreme Court of 
16 December 2013. 

 
 
 
 
 
 
 
                                                 
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1.2  The Hungarian Parliament subsequently adopted Law XXXVIII of 2014 on measures to address 
the  Supreme  Court’s  decision  on  consumer  loan  contracts6.  This  legislation  regulates  loans 

issued in forint and foreign currency, as well as financial leases, entered into by natural persons. 

Amongst  other things,  the legislation:  (a)  declares  that  it is  illegal  for  financial  institutions  to 

profit from exchange rate margins and requires financial institutions to calculate the amounts to 

be  repaid  to  affected  consumers  using  the  official  exchange  rate  published  by  the  MNB;  and 

(b) states that unilateral amendment of the general terms and conditions of a loan contract or a 

financial  lease  fails  to  satisfy  the  principles  outlined  in  the  Supreme  Court’s  ruling  and  is 

therefore  unfair,  and  thus  void,  unless  proven  otherwise  by  a  financial  institution  in  court 

proceedings. The adoption of Law XXXVIII of 2014 and the further detailed rules set out in the 

draft law are the beginning  of  a series  of legislative measures aiming  to address  the  Supreme 

Court’s decision.  

1.3  The  draft  law  prescribes  the  procedures  implementing  the  new  legal  measures  introduced  by 

Law  XXXVIII  of  2014,  including  the  applicable  timelines.  The  draft  law  specifies  the  rules 

applicable to write-offs or repayments, which depend on the status of the contract (i.e. whether 

or not obligations under the contract remain to be performed) and, in particular cases, the rules 

for  determining  the  applicable  exchange  rate  and  the  interest  rate.  Where  the  consumer  has 

benefited from a discount or reduction of their payment obligations (e.g. as a result of the early 

repayment  scheme  or  the  exchange  rate  cap  scheme),  the  draft  law  provides  that  a  deduction 

will be made by the financial institution from the write-off or repayment, corresponding to the 

discount  or  reduction  previously  granted.  Specific  procedural  rules  are  set  out  to  govern 

adjourned legal proceedings, also temporarily prohibiting any unilateral increase in the interest 

rate,  costs  and  fees  applicable  to  consumer  loan  contracts  until  30  April  2016.  The  draft  law 

states that the financial institutions will ultimately bear the costs of implementing the draft law. 

Further  provision  is  made  for  a  formal  dispute  resolution  procedure  which  will  be  available 

before the Pénzügyi Békéltető Testület (Financial Reconciliation Board), with support from the 

MNB. Additional tasks are given to the MNB in its supervisory capacity and the draft law also 

ensures  consistency  with  other  relevant  legal  acts.  Finally,  amendments  are  made  to  certain 

accounting  and  taxation  rules  to  facilitate  the  performance  of  existing  and  future  payment 

obligations by the financial institutions under the new rules. 

1.4 

In  addition  to  determining  the  basic  rules  of  procedure  implementing  the  new  legal  measures 

introduced  by  Law  XXXVIII  of  2014,  the  draft  law  authorises  the  Governor  of  the  MNB  to 

adopt a decree prescribing certain relevant details to be provided by financial institutions. This 

includes  details  on  the  implementation  of  the  new  obligations,  the  date  on  which  such 

obligations  should  be  performed  and,  in  certain  limited  cases,  the  date  of  the  applicable 

6  

Magyar Közlöny 98/2014, 18.07.2014. 

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exchange rate to be used, as well as the date on which any financial obligations should be fully 

performed, the content and formalities involved, and the applicable rules of publication. 

2 

General observations 

The appropriate time to consult the ECB 

The  draft  law  was  adopted  by  Parliament  on  24  September  2014,  shortly  after  the  ECB  was 

consulted, and before the ECB could adopt its opinion. As a consequence, Parliament could not 

take  the  ECB’s  views  into  account  before  adopting  the  draft law.  Moreover,  the  draft law,  as 

adopted, differs substantially from the draft law on which the ECB has been consulted due to 
the amendments7 adopted by Parliament during the legislative process. This opinion is based on 

the draft law sent for consultation to the ECB.  

The Hungarian authorities have again failed to comply properly with their duty to consult the 

ECB. The adoption of the draft law, as amended, does not relieve the authorities of their duty to 

consider this opinion, in particular with regard to the application and interpretation of the draft 

law, as adopted, and any future amendments thereto. 

The  ECB  would  like  to  emphasise  that,  even  in  cases  of  particular  urgency  or  where  the 

legislative  process  has  reached  an  advanced  stage,  the  national  authorities  are  not  relieved  of 

their  duty  to  consult  the  ECB  at  an  appropriate  stage  in  the  legislative  process  that  allows 

sufficient time for: (a) the ECB to examine the draft legislative provisions and adopt its opinion 

in all required language versions; and (b) the national authorities to take into account the ECB’s 

views  in  accordance  with  Decision  98/415/EC.  The  ECB  would  therefore  appreciate  the 

consulting  authority  honouring  its  obligation  to  consult  the  ECB,  in  accordance  with 

Decision 98/415/EC, in the future. 

3. 

Specific observations 

3.1  The  ECB  would 

like 

to  stress 

that  all  observations  made 

in  paragraph  3  of 

Opinion CON/2014/59 remain applicable. Of particular importance are the comments made in 

paragraphs 3.3 and 3.4 concerning the potential of the measures to: (a) place significant strain 

on  the  banking  sector,  potentially  adversely  affecting  the  stability  of  the  Hungarian  financial 

sector  as  a  whole  and  the  situation  of  individual  financial  institutions;  and  (b)  create  cross-

border spill-over effects on banking groups’ profits and capital positions, possibly resulting in 

adverse  spill-over  effects  on  the  economy.  These  paragraphs  in  Opinion  CON/2014/59  also 

comment  on  the  need  for  a  meaningful  dialogue  between  the  Hungarian  authorities  and  all 

relevant stakeholders, as well as the need for due consideration of the interests of the general 

7   See amendments Nos T/1272/4 and T/1272/6. 

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public, including financial institutions and borrowers, as well as the interests of the authorities 

responsible for ensuring the stability of the financial system in Hungary.  

3.2  On the issue of financial stability, the ECB welcomes the fact that the draft law empowers the 

Governor  of  the  MNB  to  require  certain  relevant  details  relating  to  the  new  legal  measures 

introduced by Law XXXVIII of 2014, since the MNB is both the national competent authority 

responsible for micro-prudential supervision and the macro-prudential supervisory authority in 

Hungary. The MNB is best placed to assess the terms and conditions of loan contracts entered 

into by consumers and the impact of the new legal measures on financial institutions. Within the 

scope of its tasks, the MNB can contribute to the prevention and mitigation of systemic risks to 

financial stability. As regards the legislative powers proposed to be granted to the Governor of 

the MNB under the draft law, which are more than technical in nature, the ECB expects to be 

consulted  in  a  timely  manner  on  any  draft  legislative  provisions  proposed  by  the  Governor 

within the ECB’s scope of competence in accordance with Decision 98/415/EC. 

3.3 

In  view  of  the  high  proportion  of  financial  institutions  owned  by  foreign  banking  groups 

operating  in  the  Hungarian  banking  sector,  and  in  order  to  prevent  contagion  and  threats  to 

financial  stability  within  the  European  Union,  the  MNB  should  also  inform  the  ECB,  the 

European Systemic Risk Board and other relevant stakeholders of any proposed implementing 

measures in the future. 

3.4 

In addition to its new supervisory tasks involving the verification of compliance with the new 

legal  measures  applicable  to  consumer  loan  contracts,  the  MNB  will  be  tasked  with  the 

mediation  of  complaints  and  the  initiation  of  legal  proceedings  in  the  public  interest.  In  line 

with the principle of central bank independence, the MNB should be able to carry out these new 

tasks  while  having  sufficient  financial  resources  to  carry  out  its  tasks  within  the  European 

System  of  Central  Banks  (ESCB).  The  principle  of  financial  independence  requires  that  a 

national central bank has sufficient financial resources to perform both its ESCB and national 

tasks, which in this case includes the new tasks given to the MNB. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 10 October 2014. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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