Parties react to top court ruling on Quaestor compensation law

Budapest, November 17 (MTI) – Hungary’s ruling Fidesz party said the Constitutional Court’s decision to axe parts of a law on compensation for investors of failed brokerage Quaestor served the interests of the banking sector, while opposition parties once again called on the government and central bank to take responsibility for the scandal.

As we wrote, Tuesday’s Constitutional Court ruling concerns the law governing a top-up fund which was set up to help Quaestor clients.

The court ruled that the law discriminated against some investors when determining their eligibility for compensation.

Further, the law placed disproportionate ownership restrictions on investment service providers that were obliged to provide compensation, the court said, adding that these providers had not been given enough time to make preparations for complying with the law.

Quaestor investors were already eligible for compensation from the Investor Protection Fund (Beva) for up to 20,000 euros, but lawmakers approved legislation that effectively raised the threshold to about 100,000 euros, while leaving Beva members to cover the difference.

Beva earlier estimated the top-up fund would reach almost 100 billion forints (EUR 320m).

Chairman of the top court Barnabas Lenkovics told MTI on Tuesday that the law on compensating Quaestor victims is repairable and can be made constitutional. In the current form, the law is not applicable but this does not mean that its basic purpose is unconstitutional, he added.

Hungary’s Banking Association welcomed the Constitutional Court ruling and called it a “good direction”.

Levente Kovacs, general secretary of the association, told MTI that taxpayers “cannot be made to pay compensation to investors seeking higher than average yields”. He argued that “hunting for profits” involves risk, which should be borne by those embarking on such business rather than by “people or organisations that have nothing to do with it”.

Hungarian banks work in a “regular and honest” way, and cannot be held responsible for the activities of brokerage companies outside the banking sector, Kovacs said.

Fidesz said that it was the banks that had halted compensation for the victims by turning to the top court over the law. The party said the court’s decision brought into question whether victims of the fraud can be paid any interest as part of the compensation.