Because, in the case of a cross-border institution, domestic financial supervision as a “host country” is only entitled to extremely limited consumer protection rights.
It would be particularly important for Revolut Bank to carry out its activities as a domestic subsidiary bank, with headquarters in Hungary, with sufficient capital, under the supervision of the Magyar Nemzeti Bank (MNB), due to the increasing number of fraud cases against retail customers in the financial sector and its growing domestic customer base, the central bank announced.
Revolut Bank in Hungary is currently under the supervision of the Central Bank of Lithuania and operates under the guarantee of the local deposit insurance company, not as a branch or as an independent domestic subsidiary bank under the supervision of the MNB. In the event of a fraudulent, settlement or other consumer legal dispute, the bank’s customers can only attempt to report their complaint to Revolut Bank in writing in Lithuanian or English, instead of the Hungarian-language – telephone or personal – customer service, they wrote in the announcement.
Important: in the case of a cross-border institution, domestic financial supervision as a “host country” is only entitled to extremely limited consumer protection rights.
If Revolut Bank were to become a branch here, it would strengthen domestic consumer protection supervisory powers. Among other things, it would provide domestic consumers with the opportunity to enforce their claims before the MNB, in Hungarian, upon request, within the framework of a consumer protection procedure. In addition, the Hungarian supervisory authority could carry out continuous consumer protection supervision at the bank and in the process could also oblige it to submit data – they pointed out.
According to press reports, the Lithuanian Revolut Bank UAB, which provides electronic financial services as a cross-border institution at home, has around 10 million customers in Central and Eastern Europe. Within this, the Hungarian customer base of 1 million represents the credit institution’s second largest regional market, and Budapest is in 3rd place in the ranking of regional cities with 365,000 customers – they write in the announcement. According to further press information, the owner of the Lithuanian subsidiary, London-based Revolut Ltd., does not have the audited annual report for the year 2022. The parent company published its 2021 financial report in March this year, but according to its auditor, there are substantial material errors on the income side, the statement reads.
The Magyar Nemzeti Bank emphasized that it welcomes innovative financial solutions, but only with full consideration of consumer protection aspects. Innovations strengthen market competition in the domestic financial sector, encourage institutional developments, more cost-effective operation and domestic financial services that provide a greater customer experience. However, none of this can reduce the financial security of Hungarian customers in any way.