HUNGARY Law and Practice Contributed by: Pál Rahóty, Lakatos, Köves & Partners
age rate of charge (APR/APRC), total cost of credit, instalment schedule and key rights before conclusion of the contract. For investment services, MiFID II man - dates detailed ex-ante and ex-post disclosure of all costs and charges, including inducements and third- party commissions. Insurance distribution requires transparency regarding the remuneration structure, and crypto-asset services under MiCA require clear disclosure of fees and, in some cases, token-specific white papers. Indirect remuneration (such as merchant commis - sions, referral fees, spreads embedded in FX rates or inducements in investment distribution) is gener - ally allowed but must be transparent and, in regulated sectors, is often subject to additional conduct rules (eg, conflicts of interest management and annual ex- post reporting). In practice, Hungarian compliance depends less on which pricing model is chosen and more on whether the fintech correctly classifies its activity and provides sector-specific disclosures in the required format and timing, with the MNB actively supervising compliance and enforcing consumer transparency standards. 2.4 Variations Between the Regulation of Fintech and Legacy Players The short answer is that Hungarian fintechs are gener - ally regulated by activity, not by status – meaning that if a fintech performs the same regulated activity as a bank (eg, deposit-taking, lending, payment services, investment services), it is subject to largely the same EU-derived sectoral rules, but often under a different institutional category (eg, payment institution instead of credit institution). Hungary follows the EU “same activity, same risk, same rules” principle embedded in frameworks such as PSD2, MiFID II, the Capital Requirements Directive (CRD)/Capital Requirements Regulation (CRR) and MiCA. The MNB acts as the integrated prudential and conduct supervisor for both legacy institutions and fintech firms. That said, there are important structural differences in prudential intensity. For example, banks (credit institu - tions) are subject to the full CRD/CRR regime, includ - ing capital ratios, liquidity coverage (LCR), leverage ratio, recovery and resolution planning, and deposit guarantee participation. By contrast, fintechs author -
ised as payment institutions or e-money institutions face lower initial capital requirements and no depos - it-taking licence, but must comply with safeguarding rules and operational requirements under PSD2 and Hungarian implementing law. In short, banks face broader and heavier prudential supervision; fintechs face more limited but still structured sectoral regimes tied to their licensed activity. As regards conduct, transparency and consumer protection, fintechs and legacy players are regulated almost identically. Disclosure of fees (PSD2), APR in credit (Consumer Credit Directive), cost and induce - ment transparency (MiFID II) and crypto transparency (MiCA) apply regardless of whether the provider is a traditional bank or a digital-native fintech. However, fintechs may experience relatively greater supervisory focus on outsourcing, information and communication technology (ICT) risk and operational resilience under the Digital Operational Resilience Act (DORA), par - ticularly where they rely heavily on cloud infrastructure or act as third-party providers. In practical terms, the main regulatory difference in Hungary is not lighter conduct rules, but rather that fintechs typically oper - ate unlicensed or under narrower licences with lighter prudential burdens, while banks are subject to the full spectrum of systemic risk regulation. 2.5 Regulatory Sandbox Hungary does have a regulatory sandbox for fintechs, operated by the MNB as part of its Innovation Hub initiative. It is designed to provide a supervised test environment where eligible firms can experiment with innovative financial services, technologies or business models with real clients under defined conditions, while temporarily relaxing certain regulatory require - ments to reduce barriers to entry and support practi - cal validation of new solutions. Under the Hungarian regulatory sandbox ( Innovációs Pénzügyi Tesztkörnyezet – IPT), applicants start with a preliminary consultation with the MNB to clarify expectations and what compliance deviations might be needed. Firms then submit an application and – if accepted – receive a sandbox licence/approval enabling limited live testing with real customers for a defined period, with regulatory monitoring and joint evaluation at the end of the test phase. During
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