Budapest court submits FX retail loan query to Luxembourg

Budapest, March 3 (MTI) – The Budapest Municipal Appellate Court has submitted a query to the Court of Justice of the European Union on guidance for a case involving retail borrowers’ burden of responsibility for exchange rate risk, daily Magyar Idők said on Friday.

Balázs Lehoczki, who works for the Court of Justice’s press department, told the paper that the Hungarian court is seeking to determine whether a contract complies with EU law that makes exchange rate risk for an FX retail loan the sole responsibility of the borrower.

The main question is whether EU consumer protection laws allow such a contractual clause, he added.

The Budapest court has also asked the court in Luxembourg whether the issue can be reviewed at all, considering changes to Hungarian legislation on FX lending over the past years.

Hungarian lawmakers earlier ordered banks to give FX borrowers refunds and rebates for using exchange rate margins to calculate repayments and for making unilateral changes to contracts. They also required nearly all retail borrowers to convert their FX loans into forints. The measures resulted in a benefit of more than 1,000 billion forints (EUR 3.2bn) for borrowers and reduced FX retail lending stock, once the most popular loans in Hungary, to a negligible amount.

It takes the Court of Justice about one year to respond to such queries, Lehoczki told the paper.

Source: MTI