MAGYAR NEMZETI BANK
3.3 SUPERVISION AND CONSUMER PROTECTION In 2020, the MNB’s supervisory activities were dominated by the pandemic and the related measures. The pandemic generated challenges to on-site and off-site supervision as well as consumer protection, and the central bank successfully overcame all of them. It employed several supervisory regulatory instruments in the financial and capital market sector, the insurance sector and the funds sector, with the intention to monitor the trends in the economic and financial system as well as to identify and mitigate risks caused by the pandemic. The MNB considered it a priority to respond to the enquiries from institutions, stakeholder organisations and consumers related to government and central bank requirements, and to provide information to the supervised institutions and consumers. Moreover, it reviewed and expanded the opportunities offered by methodologies and supervision so that supervisory activities can be conducted smoothly with minimal risks, while safeguarding the health of customers and central bank employees. Within the framework of the MNB’s supervisory objectives laid down in its supervisory strategy, Strategy and Trust 2.0, adopted in 2019, on supporting digital solutions and enhancing competitiveness, an executive circular was drawn up in 2020 based on the first Hungarian ‘suptech’ tool, an itemised database containing motor third-party liability (MTPL) insurance data. Among other things, it highlighted the necessity of using the central itemised MTPL database for appropriate pricing. The development project (DLT project) based on blockchain technology represents a ground-breaking digital innovation by international standards and aims to establish a network of digital relations between the insurance and the banking sector and record home insurance policies related to lending in a single system. 2020 saw the establishment of a consortium of participants in the development, allowing this innovative project to begin the IT implementation phase. In terms of consumer protection, the number of Certified Consumer-Friendly Housing Loans continued to rise, Certified Consumer-Friendly Home Insurance appeared among the products on offer, and in 2021 several market participants will start selling Certified Consumer-Friendly Personal Loans, which were introduced last year as the third member of the family of certified products.
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Based on the data from 1 January 2020, the MNB is responsible for the prudential supervision of 1,445 institutions, while according to data from 31 December 2020, the number of institutions was 1,381. The number of institutions continued to shrink (by 4 per cent). This was mainly due to the consolidation process affecting intermediaries on the insurance and financial markets. Inspections and audits were hampered by the state of emergency declared on 11 March 2020, in view of which the MNB decided on 18 March 2020 to postpone its planned on-site inspections at financial organisations by two months. The MNB terminated some of the ongoing inspections and rescheduled planned procedures. During the year, 107 prudential inspections, 334 consumer protection inspections, 27 market surveillance inspections and 4 inspections related to issuer supervision were closed. In the period under review, the MNB issued a total of 2,790 material decisions in prudential legal enforcement and licensing cases and 164 consumer protection decisions, while in the market surveillance and issuer oversight areas 27 and 37 official decisions were made, respectively. In 2020, the total penalties imposed by the MNB amounted to HUF 3,124 million. Out of this, the penalties imposed during measures related to prudential supervision1 totalled HUF 1,059.8 million, consumer protection penalties totalled HUF 145.4 million, market surveillance penalties amounted to HUF 1,864.2 million, while issuer supervision penalties amounted to HUF 54.6 million.
Supervision of money market institutions Within the framework of supervising credit institutions, financial enterprises, payment institutions and money market intermediaries, the MNB closed 37 prudential examinations and 12 supervisory inspections. In the course of the examinations and continuous supervision, the MNB imposed prudential penalties of HUF 544.3 million on institutions, in particular related to capital requirements, transaction rating, client rating, collateral valuation, debt cap rules, the equivalence of analytical records and the ledger, internal audits, the violation of legal provisions relating to the existence of personal and material conditions as well as the failure to implement legal provisions related to the prevention and deterrence of external and internal fraud and non-compliance with the measures set forth in previous decisions.
ll penalties imposed on institutions related to supervisory procedures, together with the consumer protection penalties applied during A prudential inspections.
ANNUAL REPORT • 2020
