Weekly newsletter

The opposition Socialist Party (MSZP) demands new laws on forex loans held by Hungarian borrowers in light of a recent ruling by the EU’s court of justice, a deputy leader of the party said on Wednesday.

In its ruling this month, the European court established in connection with a Polish case that FX loan contracts had to be declared void if borrowers had not been informed about exchange rate risks in advance, László Szakács told a press conference.

In Hungary, parliament passed in 2014 several laws designed to amend unfair terms of FX loan contracts on which repayments skyrocketed when the forint plummeted during the 2008 financial crisis. However, the exchange-rate risk remained a risk borne by the borrower. Hungarian laws have so far prohibited retroactive cancellation of contracts by the loan-holder due to unfair terms in the contract.

In June this year, a consultative board of the Kúria, Hungary’s supreme, proposed two solutions to be considered by courts in FX loan lawsuits in which borrowers proved that they had either not been informed about exchange rate risks or had been informed only in vague terms.

Forex Loan Contracts with Unfair Exchange Rate Risks can be Cancelled Retroactively, says CJEU

Szakács on Wednesday criticised the consultative board for suggesting that the European court’s ruling should not be applied in Hungary.

He urged drafting new legislation with a provision stating that the banks had failed to inform borrowers about the exchange rate risks.

This would spare launching here 1,700,000 lawsuits altogether, he said, calling for terminating foreclosures on the homes of troubled borrowers.

In the featured photo: László Szakács. Photo via mszp.hu