The Hungarian government struck a deal with the country's commercial banks Friday to set up a code of ethics to protect consumers' rights after recent financial turmoil, the prime minister said.
"Respecting the code will not be an option for the banks, but rather an obligation," Prime Minister Gordon Bajnai told journalists after the meeting with bank representatives.
It "will be controlled by the PSZAF (financial regulator), which will punish those who do not stick to it with the strictest financial sanctions."
The announcement came after numerous consumers complained of banks taking unilateral steps and changing contracts, often to their clients' disadvantage.
In the case of foreign currency loans, monthly payments were quickly hiked after the global economic crisis weakened the forint, the local currency.
When it strengthened however, the banks were slower to react and they also lowered the monthly payments rate less substantially. In other cases, they increased interest rates.
The banks have now agreed to make no unilateral changes to customer contracts for two months starting on August 1.
During this time, the government will draw up the code of ethics with the Hungarian Financial Supervisory Authority (PSZAF), as well as the Hungarian Competition Authority.
The document will set out the different procedures, conditions and legal framework under which banks and consumers will be able to modify or end their contracts, according Bajnai said.
Hungary was one of the countries worst hit by the global crisis. It averted a financial meltdown with a massive bailout from international organisations including the European Union, the International Monetary Fund and the World Bank in October.
Copyright 2009 AFP Global Edition
