The European Court of Justice has finally ruled on the Kasler case and, indirectly, all foreign currency-denominated litigation.
A judgment a few days ago ruled in another case that a foreign currency loan was not unfair if customers were properly informed about the risk of exchange rate fluctuations.
Current lawsuit was the application of the exchange rate margin
The subject of the current lawsuit was the application of the exchange rate margin, ie the bank disbursed the loan at the foreign exchange purchase rate and the installments were settled at the foreign exchange selling rate. According to the applicant, he could not have known that he would have to pay such a cost because it was not itemized.
That is why he wanted to achieve a full contract cancellation and a return to the original condition, ie to get rid of the exchange rate loss.
According to banks, however, the loan is based on foreign currency, which has been converted to forint due to the customer and then the monthly repayment of the forint is converted into foreign currency.
The bank charges a fee for this real service
As usual, the bank charges a fee for this real service, which could not have been unknown to anyone, as all bank branches have a foreign exchange rate, where the difference is the bank’s reward for the service. Thus, an average citizen should be aware that a currency conversion has costs even if it is not specifically mentioned in the contract.
On the one hand, the European Court of Justice has now ruled that the use of different exchange rates is not necessarily justified, which favors debtors. The other important thing he said (and that was the real stake in the lawsuit) is that if the Hungarian Mansion decides that the exchange rate margin is not justified, then the disputed part must be corrected so that the entire contract remains. In other words, it is not possible to request the cancellation of contracts and the restoration of the original status for this reason, which is the purpose of almost all foreign currency loan proceedings.
Exchange rate margin can only be unfair if it was not listed as a cost
Applying the exchange rate margin can only be unfair if it was not listed as a cost in the particular contract. As there were so many banks, many contracts within the bank over time, no comprehensive settlement is expected. It is much more likely that clients will have to prove individually that they did not know that there is a cost to converting currencies. However, as the resulting gains are negligible (up to 2-3% of the value of the loan), litigation is expensive and even so far the exchange rate margin has been an excuse to cancel the entire contract, so hopefully there will be no more mass litigation.
What remains to be asked is whether the Court considers unfair interest rate increases on banks. But from the above, the worst thing that can happen to banks is that they need to adjust interest rates retrospectively, which, of course, can be a serious argument, but not as large as canceling contracts for that reason.