Dávid Keskeny: Consumer Protection Monitoring Activities of the Hungarian National Bank

Introduction

The transformation of the financial sector in the 21st century is not only reflected in its economic and technological dimensions but has also led to significant shifts in regulatory regimes. The globalisation of financial markets, the rise of digitalisation and the increasing complexity of financial products have created an environment in which consumer protection is in a particularly vulnerable position. The ability to interpret the information needed to make financial decisions, to compare products, to assess risks and to understand the long-term consequences is becoming increasingly challenging, even for financially literate consumers. This calls for a proactive rethinking of consumer protection regulation and supervision, including the strengthening of monitoring.

Since the merger of the Hungarian National Bank (MNB) with the State Financial Supervisory Authority in 2013, the MNB has had an integrated supervisory role, covering both prudential and consumer protection areas. This integration offers a unique opportunity to balance and complement the activities of the central bank in the protection of financial stability and consumer interests. Over the past decade, the MNB has gradually built up a risk-based, data-driven consumer protection monitoring system that allows for a systemic analysis of market trends, abuses, product risks and consumer complaints. This monitoring activity is not only a reactive tool to detect breaches ex post, but also serves as a basis for proactive, preventive interventions.^[1]

In the design and operation of the consumer protection monitoring system, the Magyar Nemzeti Bank uses a number of tools: thematic surveys, analysis of customer service databases, the experience of the Financial Navigator programme, and the processing of consumer complaints using machine learning methods.^[2] In addition, the international regulatory environment, in particular the EU consumer protection directives and the recommendations of the European supervisory authorities (EBA, ESMA, EIOPA), are also integrated into the operation of the domestic monitoring system. This complex and multi-disciplinary approach to consumer protection, which draws on legal, economic, sociological and IT knowledge, allows the MNB not only to control but also to shape market processes in a forward-looking way.

The aim of this paper is to present in detail the theoretical and institutional foundations of the consumer protection monitoring activities of the Magyar Nemzeti Bank, its practical operation, and to assess its effectiveness and potential for further development. To this end, the paper examines four main issues:

1. 1. What is the historical and legal context in which the MNB’s consumer protection remit has evolved?
   2. What tools and methods are used for monitoring?
   3. What practical results has the system achieved in recent years?
   4. How does the Hungarian monitoring model fit into international practice, and what improvements are warranted?

The methodology of the study is multidisciplinary: it draws on legal analysis, economic evaluation, institutional historical contextualisation and international comparison. The primary sources for the study include official MNB documents (e.g. annual consumer reports), international literature (e.g. OECD and EU recommendations).

The MNB’s consumer protection monitoring activity is therefore not just a technical surveillance exercise, but a modern tool of public interest regulation that serves the stability of the financial system, social justice and fair treatment of consumers at the same time. The aim of this study is to contribute to the theoretical underpinning and practical evaluation of this system, thereby supporting the sustainable development of the financial sector and strengthening consumer confidence.

1. The historical and legal foundation of the Hungarian National Bank’s consumer protection tasks

The examination of the consumer protection tasks of the Magyar Nemzeti Bank (hereinafter: MNB) can only be understood in the light of the regulatory and institutional development of the central bank. The introduction of the consumer protection approach into the central bank’s functions has not only meant a change in institutional but also in regulatory theory. In addition to the traditional tasks of central banks – monetary policy, price stability, stability of the financial intermediation system – over the past two decades, they have gradually been complemented by functions that directly serve to protect the public and strengthen social confidence in the financial sector.

1.1 Development of financial supervision in Hungary

In Hungary, an independent financial supervision system gradually developed in the post-change period. Since the late 1990s, the State Financial Supervisory Authority (hereinafter: PSZÁF) has operated as a separate institution, supervising the banking, insurance, capital market and pension fund sectors. In its last phase of operation, the PSZÁF had an independent Consumer Protection Directorate and its supervisory activities were increasingly focused on the interests of consumers.

In the early 2010s, it became clear that post-crisis financial regulation needed to take a new direction: towards efficiency and greater public involvement. The government merged the PSZÁF into the Magyar Nemzeti Bank on 1 October 2013, creating a single, integrated supervisory model. The MNB thus concentrated monetary policy, macro-prudential and micro-prudential supervision, as well as financial consumer protection functions¹ under one roof.

1.2 The MNB’s role in consumer protection under the Central Bank Act

The basic framework for the MNB’s operations is laid down in Act CXXXIX of 2013 (hereinafter: MNB Act). Article 4 of the Act sets out the core tasks of the MNB, which include maintaining the stability of the financial intermediation system, of which financial consumer protection is an integral part.^[3]

Articles 39-43 provide in detail for supervisory powers. Of particular relevance to consumer protection monitoring is the point in Article 39(1), which states that the MNB is responsible for ensuring that “financial institutions operate in accordance with the law and with prudent and consumer protection considerations” when supervising the financial intermediary system.

The MNB is legally mandated to organise its consumer protection activities along three main lines:

1. 1. preventive monitoring and analysis,
   2. thematic studies and market surveillance,
   3. direct official action.

The legal framework therefore creates not only an opportunity but also an obligation for the central bank to protect consumers. This obligation includes not only the sanctioning of market abuses but also their prevention, on which the monitoring system is based.

1.3 Background on consumer monitoring

Consumer monitoring as an institutionalised activity started to receive special attention after the restructuring of the MNB in 2013. Aggressive sales practices in the financial sector, social problems arising from foreign currency lending and risks arising from inadequate information justified the introduction of systematic, data-driven and risk-oriented monitoring.^[4]

This necessity was confirmed by Péter Bodnár Miskolczi, who examined the legal aspects of tackling deceptive practices in the financial sector. He argued that protection against misrepresentation has not only a sanctioning dimension, but also a preventive and systemic dimension, which requires a redefinition of public regulation and supervision.^[5]

Consumer monitoring is therefore not only a technical function, but also a normative and institutional issue. By setting up a monitoring system, the MNB is responding simultaneously to international expectations, such as the EIOPA and ESMA consumer protection recommendations, and to internal societal needs: the public’s expectation of financial security.

1.4 International context: the spread of integrated surveillance models

The integrated model applied in Hungary is not unique in Europe. In parallel with the globalisation of financial markets, several countries have opted for the introduction of a single financial supervision to improve information flows, reduce regulatory gaps and increase regulatory efficiency. In the United Kingdom have similar roles and are also increasingly consumer-oriented.^[6]

In line with international trends, the MNB’s consumer protection monitoring system is also increasingly using risk-based assessment, machine learning algorithms, data visualisation tools and indicators based on direct feedback from the public.

2. The role and objectives of consumer protection monitoring

Consumer monitoring is one of the most dynamic areas of financial supervision, with a role that goes far beyond operational data collection. In modern financial regulation, monitoring has become a strategic tool that performs predictive, preventive, risk-based and information asymmetry mitigation functions. In particular, as an institution operating in an integrated model, central bank supervision aims not only at sanctioning breaches, but also at preventing them, detecting them in a timely manner and providing structured feedback. Consumer protection monitoring is a central pillar of these activities.

2.1 The legal and theoretical position of monitoring

Financial consumer protection has traditionally been part of the non-prudential supervisory toolbox. However, after the global financial crisis of 2008, not only prudential regulation became more stringent, but also the consumer protection aspect came to the fore. In international regulation, in particular in the OECD and European Commission technical papers, monitoring as a preventive tool has been given a prominent role.

As the OECD makes clear in a report, effective consumer protection requires proactive, data-driven monitoring that can detect market anomalies early and inform regulatory responses.^[7] This concept should not be understood as a mere technical control, but as a forward-looking regulatory function in the public interest.

2.2 The MNB’s objectives: risk-based, prevention, transparency

The Magyar Nemzeti Bank organises its consumer protection monitoring activities around three key objectives:

• • Risk identification and classification: the primary objective of monitoring is to identify consumer risks arising from market practices (e.g. misleading information, disproportionate pricing, inappropriate product sales).
  • Prediction and prevention: the patterns extracted from the data allow the MNB to identify the need for regulatory intervention before mass violations occur.
  • Informing market players and consumers: in the course of monitoring, the MNB not only uses official tools, but also provides feedback on problems detected in the form of recommendations, warnings and educational content.

According to the Consumer Protection Report 2023, the MNB will base its risk-based monitoring on multi-channel data collection and structured analysis, taking into account:

• • the volume and type of complaints received,
  • product complexity,
  • the behaviour of service providers,
  • the level of public education.^[8]

This multidimensional approach is in line with the proportionality principle as set out in the EU’s prudential and non-prudential directives.

2.3 Changing attitudes towards surveillance: from reactive to proactive

Financial supervisors have traditionally operated in a reactive way: they have reacted to complaints, investigations and whistleblowing. Modern regulation, especially in the integrated central bank models, now requires a proactive, i.e. forward-looking, approach.

Csaba Lentner describes this change as a “broadening of functions”, where the central bank is not only an economic policy actor, but also a social confidence-building institution.^[9] It is precisely this role that monitoring reinforces: by collecting, collating and publishing information, it improves the quality of public decision-making and thus makes financial markets more stable.

2.4 International patterns of monitoring and the fit with Hungarian practice

Monitoring is not specific to Hungary: most central banks or supervisory authorities in developed economies have a similar system. The monitoring systems of the UK Financial Conduct Authority (FCA), the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and the US Consumer Financial Protection Bureau (CFPB) have served as examples for the development of the MNB’s domestic model.

At the EU level, EIOPA (insurance supervisor) and ESMA (securities and markets authority) regularly issue so-called “consumer trends reports”, which contain just such monitoring-based regulatory recommendations. On the basis of these, the MNB also produces thematic reports and risk maps (e.g. Financial Navigator Maps, Thematic Studies), which are publicly available and adapt international best practices.^[10]

2.5 Monitoring and social values: financial awareness, sustainability

The purpose of monitoring is not only regulatory, but also social. Increasing financial awareness, reducing information asymmetries and integrating ESG (Environmental, Social, Governance) aspects are increasingly part of the consumer protection agenda.

In its 2023 strategy, the MNB has set out to focus its monitoring activities on ESG-sensitive products, ethical marketing and new types of risks arising from digital financial services.^[11] In this way, monitoring is not only a tool for current market surveillance, but also the foundation for future-oriented social regulation.

3. The functioning of the MNB’s consumer protection monitoring system

The consumer protection monitoring system of the Magyar Nemzeti Bank is not only a functional subsystem of institutional operation, but also a complex mechanism that underpins the transparency of financial markets, the strengthening of consumer confidence and the timing of regulatory intervention. While the legal framework of financial consumer protection declares consumer rights, monitoring is a real-time, risk-based and analytical assurance of their enforcement. The monitoring activities carried out by the MNB integrate data collection, qualitative and quantitative analysis and the generation of intervention proposals – often in cooperation with several disciplines (law, economics, IT).

3.1 Data sources and monitoring channels

The Magyar Nemzeti Bank’s consumer protection monitoring activity relies on several different types of data sources, which, when combined, allow for a multidimensional analysis of market risks. The primary source is the system of consumer complaints received by the MNB, which involves the processing of tens of thousands of complaints every year. Some of the data is structured (complaint theme, institution concerned, type of case), while others are textual and qualitative (e.g. customer testimonials), which are interpreted using text mining techniques based on artificial intelligence.^[12]

They are additional sources of data:

• • The experience of the Financial Navigator Advisory Network, which can provide information on local financial problems on a regional basis.
  • Thematic inspections by public authorities (e.g. insurance intermediary practices, advertising of personal loans).
  • Online consumer feedback and media monitoring.
  • Market surveillance data collection on the basis of regular reporting by financial institutions.

The data collected in this way is assessed by the MNB in an internal risk analysis framework, which, in addition to regulatory compliance, examines the transparency of market practices, the clarity of customer communication content and the appropriateness of product structures.

3.2 The role of complaint analysis in monitoring

The MNB investigates more than 30,000 consumer complaints every year, which are a key element of its monitoring activities.^[13] The evaluation of complaints is not only a matter of individual case management, but can also provide aggregated analyses:

• • complaints concentrated on the same service providers,
  • frequently recurring types of problems (e.g. early repayment charges, APR cancellation),
  • the risks associated with emerging market products.

Key technologies used in complaint analysis include text mining, machine learning and classification by thematic categories. This allows the central bank to react quickly to trends that pose a systemic risk and issue timely notices, warnings or recommendations.

Complaints are also integrated into the Financial Navigator Portal, which provides public access to key advice and common mistakes – raising consumer awareness.^[14]

3.3 Thematic studies and targeted interventions

One of the most important results of monitoring is the commissioning of thematic studies to explore a specific risk area in more depth. These investigations may include:

• • product-based (e.g. commodity loans advertised with a “zero percent” APR),
  • sector-based (e.g. the operation of online insurance intermediaries),
  • demographic (e.g. the vulnerability of young consumers to digital channels).

In thematic studies, the MNB both maps market practices and establishes benchmarks against which to make a comparative assessment. The output of the analyses can be:

• • dedication,
  • Communication,
  • initiating a legislative amendment,
  • official proceedings or fines.^[15]

Thematic monitoring thus goes from data collection to market correction and even to influencing legislation.

3.4 Innovative tools: artificial intelligence and visualisation

The Magyar Nemzeti Bank will gradually integrate artificial intelligence (AI)-based tools into its monitoring system from 2020.^[16] Applications of AI include:

• • automatic clustering of complaints,
  • predictive modelling,
  • predicting the risks of non-compliance.

Monitoring data is also displayed using interactive visualisation tools, such as the Financial Navigator Map, which shows the most common problems by region. This tool not only supports the work of the central bank, but also provides transparency on the geographical and thematic distribution of consumer protection problems.

3.5 The link between monitoring and official action

The monitoring activity does not end with the analysis. The MNB has the opportunity to act on the basis of the risks and irregularities identified:

• • order an official control,
  • to initiate consumer protection proceedings,
  • impose a fine,
  • prohibit the marketing of the product.

However, the Central Bank stresses the principle of proportionality and monitoring usually starts with preventive, educational tools (e.g. warnings), followed by sanctions only in justified cases.^[17]

This practice is in line with EIOPA and ESMA guidelines that consumer protection interventions should be “risk-based and proportionate” – i.e. regulatory responses that are tailored to the risks and proportionate.

4. Consumer issues in the focus of monitoring (case studies and trends)

A key element of the success of consumer protection monitoring is its ability to respond to changes in the financial market, identify emerging risks and, based on this, identify thematic focus areas. The risk-based approach used by the MNB can identify problematic practices not only at sectoral level, but also at product-specific level, by type of service provider and by target group. Below we provide an overview of the key monitoring focuses and related case studies for the period 2020–2023.

4.1 Credit products and consumer information gaps

The credit market, in particular the personal loans, goods and housing segments, is one of the most intensively monitored areas of consumer protection monitoring. Every year, the MNB publishes detailed analyses on the transparency of credit products, the indication of the annual percentage rate of charge (APR), the risks of interest rate changes and sales practices.^[18]

In 2022, the MNB paid special attention to schemes advertised with a “zero APR”, which in practice did not always prove to be cost-free. Such campaigns often included hidden costs, such as management fees, sales commission or linked insurance, thus misleading consumers. As a result of the monitoring activity, the Central Bank has also drawn the attention of several service providers to the importance of lawful conduct and issued warnings or notices to the public.^[19]

In the area of housing credit, a key area of the 2023 monitoring was the extent to which consumers are informed in a comprehensible and comparable way about the long-term consequences of variable or fixed rate schemes, especially in the light of the changing interest rate environment.^[20]

4.2 Transparency of the insurance market and selling practices

The insurance market is also an area of concern from a consumer protection perspective, in particular because of the role of intermediaries and the transparency of insurance conditions. In 2022, the MNB conducted a thematic inquiry into travel and personal accident insurance sold through digital channels and found that in many cases online platforms did not provide sufficiently detailed, understandable and comparable information.^[21]

The monitoring also showed that some insurance intermediaries were working with disproportionately high commissions, which distorted the structure of the products offered – the commission-driven sales logic dominated rather than the customer’s interests. In response, the Central Bank has issued recommendations and published clear information material on the Financial Navigator portal.

4.3 FinTech services and risks in the digital financial space

By the early 2020s, it has become clear that new digital financial services providers – such as Revolut, Wise or cryptocurrency wallets – will pose new challenges for consumer protection supervision. The MNB has repeatedly stressed that these services are not always subject to domestic prudential or consumer protection regulation, thus increasing the vulnerability of consumers.

In 2023, a separate supervisory warning was published regarding Revolut’s activities, in which the MNB stressed that the service is not a credit institution based in Hungary, so the funds deposited there are not protected by the Hungarian deposit insurance scheme.^[22]

The monitoring was aimed at informing the public, not imposing sanctions: the MNB used easy-to-understand infographics, educational videos and interactive tests to help people make better-informed digital financial decisions. It also signalled to legislators the need to address regulatory gaps.

4.4 Deceptive marketing and unfair commercial practices

Deceptive trade practices and marketing communications are also an important area for consumer protection monitoring. For years, the MNB has paid particular attention to offers targeting vulnerable groups of consumers, such as pensioners, young people and small mothers, which often contain manipulative elements.

Péter Miskolczi Bodnár already pointed out in his 2014 study that protection against misleading offers in financial markets is not only a consumer, but also a legal and regulatory issue.^[23] In this spirit, the MNB uses monitoring tools: if a campaign is too aggressive or if advertising text misleads the consumer (e.g. “interest-free”, “no risk”), it publishes a warning notice and in some cases has even banned the distribution of products.

4.5 The relationship between young consumers and financial education

Monitoring is also increasingly focusing on the financial behaviour of young people. According to MNB research, the 18–25 age group:

• frequently use digital financial tools,
• does not always know the contractual terms,
• are more likely to fall victim to online financial fraud.

On the basis of the 2022–2023 monitoring, the MNB started to develop targeted financial education in schools and published new content under the Financial Navigator Junior programme.

5. Results and tools of the monitoring activity

The consumer protection monitoring system operated by the Magyar Nemzeti Bank has become increasingly sophisticated over the past decade, not only in terms of its structure, but also in terms of its actual results, and has had a significant impact on the behaviour of financial market participants, product transparency, and the legislative and law enforcement processes. The following chapter aims to provide a detailed picture of the practical outcomes of the monitoring activity, i.e. the institutional and regulatory interventions that have been put in place, the tools used by the MNB, and how the effectiveness of this activity can be measured and interpreted.

5.1 Practical outputs of monitoring: forms of intervention

The basic function of consumer protection monitoring is to identify problem areas in a data-driven way, and to use them as a basis for preparing decisions for the different levels of intervention of the MNB. The institutional response based on monitoring can take several forms:

5.1.1 Recommendations, guidelines

These soft law instruments are instruments of preventive regulation. The MNB regularly publishes recommendations and position papers that are non-binding but provide guidance to market participants. These are typically:

• interpret a regulatory standard,
• make proposals for consumer-friendly behaviour,
• function as an expected market minimum.

Examples: information recommendation on home lending, consumer protection principles for online insurance intermediaries.^[24]

5.1.2 Warnings, notices

As an output of the monitoring, the MNB may also issue consumer warnings. These documents are not measures but provide public disclosure of a particular market risk. The aim here is to support consumer decision-making.

For example, in the case of Revolut, the MNB has repeatedly pointed out that the company is not licensed domestically and that its accounts are not protected by the OBA.^[25]

5.1.3 Public authority actions

One of the most important functions of the monitoring system is to provide a basis for ordering an official control or initiating a consumer protection procedure. In doing so, the MNB:

• • opens an investigation,
  • requires you to fill in the gaps,
  • impose a fine,
  • or even prohibit the marketing of a product.

In the year 2022, the MNB implemented more than 450 supervisory measures in the consumer protection sector, 60 of which were directly based on the indications from the monitoring.^[26]

5.2 System of monitoring tools

The tools used by the MNB cannot be interpreted within a single methodological framework, but constitute a complex, multi-level toolbox ranging from data collection to analysis and visualisation to intervention.

5.2.1 Complaint analysis systems

The MNB collects, classifies and analyses consumer complaints in a digital system using an artificial intelligence-based text mining methodology, where submissions are thematically and weighted. The system can identify:

• • the most common types of damage,
  • recurrent service provider behaviours,
  • regional differences.

From 2023 onwards, the system will be able to provide early warning based on the inflow of complaints.^[27]

5.2.2 Thematic monitoring projects

As part of its monitoring activity, the MNB launches thematic projects, where a specific area is targeted for months at a time. Examples include:

• • an investigation into the advertising practices of online insurance intermediaries,
  • transparency analysis of the communication of qualified consumer-friendly housing loans.

For such projects, the MNB sets up specific working groups and concludes the studies with a benchmarking exercise.^[28]

5.2.3 Financial Navigator System (PNR)

Part of the monitoring is the Financial Navigator Portal and Office, which collects information from consumers and provides real-time educational feedback. The portal offers interactive tools:

• • calculators (e.g. APR calculator),
  • complaints and whistleblowing,
  • searchable knowledge base.

Some modules of the system are now updated by machine learning, so it prioritises priority topics based on complaints received and consumer behaviour.^[29]

5.3 Monitoring effectiveness and performance indicators

Assessing monitoring activity is not straightforward, as not all outputs can be measured directly. However, the MNB monitors the effectiveness of its activities along the following indicators:

• • Number of consumer complaints, changes.
  • Repeat offence rate.
  • Number of service provider corrections after recommendations.
  • Access and use educational content.
  • Reduction in sanctioned infringements.

In 2023, the MNB introduced a “consumer impact assessment model”, which already models the impact of planned recommendations based on the expected consumer reaction.^[30]

These indicators not only provide feedback to the MNB, but also create transparency for market participants and the public through their publication.

5.4 The role of monitoring in the development of regulation

The long-term importance of consumer monitoring is not only in market surveillance but also in regulatory reform. The regulatory gaps identified by monitoring are summarised annually by the MNB and:

• • makes legislative proposals,
  • sends policy recommendations to the government,
  • participates in consultations at EU level.

Thanks to this, for example:

• • the qualified consumer-friendly home loan qualification was introduced,
  • tightened information requirements for insurance products,
  • updated the rules on online financial advertising.

Monitoring is therefore both an institutional memory and a development engine that continuously shapes the domestic consumer environment.

6. International comparison of the MNB’s consumer protection monitoring activities

The global development of financial consumer protection and related monitoring systems is closely linked to the experience of the 2008 financial crisis and the rise of digital financial products. The crisis has made it clear that the traditional, narrow prudential approach is not sufficient to preserve the stability of the financial system. There has been a growing emphasis on integrating consumer considerations into the supervisory and regulatory framework. Examples from the European Union and other international organisations such as the OECD, the G20, and national supervisory authorities such as the UK Financial Conduct Authority (FCA), the German BaFin or the US CFPB, illustrate the rise of monitoring-based, risk-based consumer protection. The consumer protection monitoring system developed by the Magyar Nemzeti Bank also fits into this international context, operating within the framework of domestic regulation but reflecting global expectations.

Examining international examples can contribute to the further development of the domestic monitoring system, with a particular focus on data-driven decision making, preventive regulatory tools and digital risk management. The aim of this chapter is to situate the Magyar Nemzeti Bank’s activities among international practices, highlighting similarities, differences and specificities of the domestic system.

Internationally, consumer monitoring is also increasingly emerging as a combination of risk-based regulation, big data analytics, the use of artificial intelligence and public engagement tools. Already in 2011, the OECD set out its high-level principles for financial consumer protection, one of the most important of which is the principle of “clear and effective oversight and enforcement”, which emphasises the importance of regular, risk-based and public monitoring. According to a document jointly issued by the OECD and the G20, effective consumer protection supervision should be able to monitor markets on an ongoing basis, identify recurring regulatory gaps and identify points of intervention in advance.^[31]

Three authorities coordinate financial consumer protection in the EU regulatory framework: EIOPA (insurance and pensions), ESMA (securities markets) and EBA (banking). Each of these three institutions publishes an annual report called the Consumer Trends Report, which is based on data and case studies shared by Member States. These documents are not just reports, but monitoring tools that help to make markets comparable, identify common trends and inform regulatory interventions.^[32] The MNB’s activities fit in with the logic of these reports: the annual consumer reports monitor the main risks in the domestic market, both thematically and sectorally.

The model of the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) is one of the best-known examples of an integrated consumer monitoring approach. Each year, BaFin publishes a special “Verbraucherschutzbericht” (Consumer Protection Report), which includes a chapter on current complaint types, an analysis of sales channels and challenges related to digital services. Data-driven complaint handling and the extensive use of warning notices are key features of the German system. The “Financial Navigator Map”, introduced by the MNB, plays a similar role: it shows consumer complaints received by region and by topic, thus making the market more transparent for consumers.^[33]

The practice of the UK Financial Conduct Authority (FCA) is particularly forward-looking in terms of digital monitoring and regulatory innovation. Already in 2014, the FCA launched Project Innovate, a regulatory sandbox model in which new financial products and services are tested in a real market environment, ahead of the regulatory authorisation process. As a result of this project, the FCA has introduced a number of monitoring tools based on machine learning, predictive analytics and customer experience-based testing methods. The MNB is also using a similar approach, albeit so far in a more limited scope, for example in its text mining analysis of complaints and in the data flow analysis of the Financial Navigator portal. The fundamental difference between the two systems, however, lies in the regulatory environment: while the FCA relies on direct consumer feedback, the MNB relies primarily on institutional data sources, complaints handling submissions and examination reports.^[34]

The monitoring practices of the Consumer Financial Protection Bureau (CFPB) in the United States are a model for complaint handling publicity. The CFPB’s Consumer Complaint Database is a public, searchable database of the types of complaints consumers have filed, by institution and by product type. In comparison, the MNB does not yet provide institution-level publicity, but regularly publishes statistics and analysis at the level of complaint themes and case types in its annual reports and Financial Navigator tools.

The international embeddedness of the MNB’s monitoring activities is also reflected in its regular participation in the EIOPA, ESMA and OECD consumer working groups. These professional collaborations not only facilitate the transfer of best practices, but also provide an opportunity for domestic regulation and monitoring to contribute to regulatory reflection at European level. The consumer impact assessment model , which will be introduced by the MNB in 2023 to estimate the likely impact of planned recommendations, is explicitly based on international examples, in particular the practice of the FCA and ESMA.^[35]

However, it is important to stress that the adoption of monitoring tools cannot be mechanical. Each regulatory system operates in a different social, institutional and legal context. The Hungarian system is specific in that it operates within a highly integrated central bank structure, where monetary, prudential and consumer protection functions are concentrated within a single institution. This provides a unique opportunity for the synergistic application of monitoring, while at the same time imposing high requirements in terms of data integration, information flow and institutional self-control.

Based on international comparisons, it can be said that the consumer protection monitoring system of the Magyar Nemzeti Bank has converged more and more with European and global best practices over the past ten years. The main strengths of the system include a risk-based approach, data-driven decision-making and the integration of educational tools into the monitoring process. The way forward could include the development of a public complaints database, faster monitoring of financial innovations (e.g. DeFi, NFT-based services) and a stronger focus on social vulnerability. These dimensions are key not only to technological or regulatory issues, but also to financial culture, public accountability and the maintenance of public trust.

7. The future and challenges of monitoring in the context of sustainability and digitalisation

The functioning of the financial sector today is at the intersection of several overlapping global transformation processes. On the one hand, there is rapid technological progress – in particular the rise of digitalisation, artificial intelligence and big data-based models – and on the other, a global shift towards social and economic sustainability. This dual transformation is not only changing the nature of financial products and services, but is also forcing a rethink of supervisory and regulatory functions.

Consumer protection monitoring is becoming a key tool in this dynamically changing environment, enabling regulators – such as the Magyar Nemzeti Bank – to not only monitor but also shape the social embeddedness, quality and safety of financial services. This chapter aims to review the future directions of consumer monitoring, with a particular focus on the integration of sustainability considerations, the risks and opportunities of digital transformation, and the role of social trust.

7.1 The role of financial monitoring for sustainability

The link between the financial sector and sustainability has gradually become institutionalised over the past decade. The European Union has established the EU 2020 Taxonomy Regulation (EU 2020/852), as part of the Sustainable Finance Action Plan, which sets out objective environmental and social criteria for the “green” rating of financial products. The Magyar Nemzeti Bank – the first among the EU central banks – published its Recommendation on Sustainable Finance in 2019 and has since been developing its ESG-focused supervisory tools year by year.^[36]

The role of consumer monitoring in this context is twofold:

• • On the one hand, it checks that financial products with ESG labels (e.g. green investment funds, sustainable insurance) are in fact consistent with the values they communicate – thus protecting against greenwashing.
  • On the other hand, it helps to map the level of understanding and preference of this type of product among consumers – providing feedback for product development and regulation.

In the future, consumer monitoring is also expected to include an examination of the interpretability of non-financial reporting (ESG reporting) by the public and an analysis of the role of ESG information in consumer decisions. This is in line with the MNB’s Green Agenda 2021, which aims to deepen the integration of environmental sustainability considerations into supervisory practices.^[37]

7.2 The challenges of digitalisation: algorithmic decisions, data-driven risks

Digitalisation is a key driver of the transformation of financial services and consumer behaviour. Online bank account opening, app-based credit products, AI-enabled customer information are all generating new risks, the monitoring of which is essential to protect consumers. In its Digitalisation and FinTech Strategy 2022, the MNB stresses that the challenge for supervision is to ensure transparency of algorithms and to examine the consumer protection implications of AI-driven decision-making.^[38]

The main consumer protection monitoring issues related to digital products are:

• • Do consumers understand that automated decision making is taking place in their transactions?
  • Is human intervention possible?
  • What data is used for profiling?
  • What are the risks of targeted advertising, “dark patterns” or personalised pricing?

The monitoring system of the future must be able to evaluate not only the product and service, but also the underlying algorithm. In regulatory practice, this requires solving the “black box problem”, i.e. the need for surveillance to see through the artificial intelligence systems of service providers. The AI Act prepared by the European Commission also foresees that for high-risk AI systems (e.g. credit scoring) an independent audit should be mandatory and should be verified by supervisors.^[39]

7.3 Synergy between financial education and monitoring

Future consumer monitoring cannot be understood without a close link to financial education. An informed consumer is not only better protected, but also gives feedback to the system. The Financial Navigator System (PNR) operated by the MNB is not only a data collection tool, but also an educational tool: it gives consumers the opportunity to learn about their rights, risks and to provide feedback on institutional practices.^[40]

The link between education and monitoring will become even more important in the future:

• • Experiences in the digital space (e.g. customer complaints, search patterns) should be fed back into educational materials.
  • The impact of educational content should be measured (e.g. search traffic, reduction in the number of enquiries).
  • Embedding financial education in schools in the baseline monitoring data could open up new opportunities (e.g. targeted protection of young people).

This synergy is not only preventive, but also social: it contributes to financial awareness, confidence and social cohesion.

7.4 Expanding target groups for monitoring: vulnerable consumers

The future of consumer monitoring cannot be imagined without taking social differences into account. Vulnerable groups – the elderly, the young, the financially illiterate, those living in digitally excluded regions – are more likely to be victims of deceptive, aggressive or discriminatory practices.

In its 2023 report, the MNB has dedicated a special chapter to the analysis of the financial vulnerability of older people and has made proposals for a targeted education and monitoring focus.^[41] Future monitoring systems should take into account social vulnerability indices and the possibility of differentiated monitoring based on client segmentation.

This is not only a database-building task, but also an ethical and regulatory challenge: how to ensure equal treatment and equal opportunities while differentiated protection?

7.5 Moving towards prediction: artificial intelligence and forecasting

One of the key directions for the future is to strengthen the predictive capacity of monitoring. Classical monitoring is typically ex post: it analyses the market on the basis of complaints and abuses that have already occurred. But data-driven and AI-enabled systems create opportunities to:

• • generate early warning signals (early warning),
  • identify types of abuse that have not yet been reported but are predictable,
  • model the impact of regulatory recommendations in advance (ex ante impact analysis).

This approach has already appeared in the MNB’s 2023 report, where a new type of impact assessment model was reported for the first time.^[42] The aim is to enable the central bank to anticipate future risks based on probabilistic, statistical and social data and to shape financial culture and market functioning in a proactive way.

8. Summary and proposals

The aim of the study was to present in detail how the consumer protection monitoring activity of the Magyar Nemzeti Bank has been developed and operates, what theoretical and institutional foundations it is based on, what tools it uses, and how it fits in with international good practices and future socio-economic challenges. The analysis has shown that monitoring is not just one technical tool among many, but one of the most important structural functions of central bank supervision, serving at the same time the stability of financial markets, social justice and the legitimacy of public interest regulation.

The first chapter of the study put consumer monitoring in historical and legal perspective, describing the evolution of the MNB’s integrated supervision model and the consequences of the 2013 merger with the PSMA. This process elevated consumer protection to a strategic level, striking a balance between prudential and non-prudential functions.

The second and third chapters explored in detail the objectives, methodological basis and operational framework of monitoring, with a particular focus on complaints analysis, thematic studies and data-driven tools. It was found that the MNB’s monitoring relies on risk-based, multi-channel data sources and provides continuous feedback to regulators and the market.

In chapters four and five, we examined through case studies the areas where monitoring has made a difference, including transparency on APR, the adequacy of insurance advertising, the Revolut phenomenon, deception in the digital space and the protection of young people. As a result of the monitoring, the MNB also applied recommendations, warnings and sanctions, thus directly influencing market behaviour.

Based on international comparisons, we found that the Hungarian system converges with international best practices (BaFin, FCA, CFPB), especially in the integration of data-driven analytics and educational tools. However, the Hungarian model is characterised by institutional integration stemming from the central bank structure, which provides unparalleled opportunities for exploiting regulatory synergies, but also imposes high standards of transparency and accountability.

The final chapter of the study looked at future directions for monitoring, with a particular focus on sustainability, digitalisation, artificial intelligence and social vulnerability. The monitoring system of the future is no longer just based on the processing of past events, but is able to identify future risks, societal impacts and regulatory needs using predictive tools.

On the basis of the above, the following recommendations are made for the further development of Hungarian consumer protection monitoring:

1. 1. Gradual introduction of public access to complaints databases at institutional level
      Based on models in international practice (e.g. USA, CFPB), the publication by the MNB of aggregated data on consumer complaints by institution should be considered. This would increase market transparency and encourage self-correction by service providers.
   2. Monitoring the interpretability of ESG criteria at consumer level
      With the growth of sustainable financial products, there is a need for regular monitoring of the interpretation of ESG reporting and marketing messages at the retail level, with a particular focus on the risk of greenwashing.
   3. Integrating algorithmic auditing of AI-based products into the monitoring system
      The evaluation of digital financial products should not stop at the user interface – there is also a need for transparency, legality and non-discrimination checks on the functioning of the algorithms.
   4. Developing a consumer vulnerability index for differentiated monitoring
      Social exclusion, low digital literacy and financial illiteracy require particular attention in monitoring practices. The introduction of a vulnerability index would allow for more targeted interventions.
   5. Develop monitoring integrated with financial education
      Analysis of the data flow and feedback from the Financial Navigator system and structured integration of the counselling experience into the monitoring process would strengthen the link between the education and monitoring functions.
   6. Improving monitoring impact assessment tools
      The ex-ante estimation of the expected social and market impacts of planned recommendations and communications (ex ante impact analysis) should be supported by predictive models, which requires data integration and interdisciplinary analytical capacity.
   7. Expanding and deepening international cooperation
      More active participation in the EIOPA, ESMA, OECD and G20 consumer working groups would help to update the domestic monitoring system and to transfer best practices.

These proposals not only guide regulatory practice, but also societal values. Consumer monitoring is not a technocratic exercise, but a public interest activity to ensure that the financial system is people-centred and fair. The work of the Magyar Nemzeti Bank so far represents a significant step forward in this area, but the challenges of the future require a continuous renewal of tools and approaches.

The study sought to demonstrate that the future of the monitoring system depends on our ability to interpret it not only as a data collection framework, but also as a social justice and regulatory philosophy – and to develop it accordingly. Herein lies the future relevance and scientific value of the MNB’s consumer monitoring activities.

Bibliography

Lentner Csaba: A 2013 utáni jegybanki szabályozás aktuális kérdései, in Birher Nándor (et al.) (szerk.): Studia In Honorem István Stipta 70, Budapest, Károli Gáspár Református Egyetem Állam- és Jogtudományi Kar, 2022, 291–298.

Lentner Csaba: A jegybanki szabályozás tanulságai a 2008-2015-ös időszakról – nemzetközi összehasonlító elemzés, Gazdaság és Jog, XXVI. évf., 2018/3, 6-11.

Lentner Csaba: The Dynamics of Monetary Policy. Welcome by the Editor-in-Chief, Polgári Szemle, XVIII. évf., 2022/4–6, 10–13.

Miskolczi-Bodnár Péter: A szolgáltatás árának megtévesztő reklámozása, különös tekintettel a közléshez szorosan kapcsolódó további árinformáció elhallgatására, elrejtésére, in Csák Csilla (szerk.): Ünnepi Tanulmányok Prugberger Tamás Professzor 70. Születésnapjára, Miskolc, Novotni Alapitvány, 2007.

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Egyéb források

EIOPA: Consumer Trends Report 2022, Luxembourg, EIOPA, 2023, https://www.eiopa.europa.eu/document/download/b8e20202-b1f6-41a9-9df8-f3cf8a9e96f9_en?filename=Consumer%20trends%20report%202022.pdf

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Financial Navigator Papers, MNB, https://www.mnb.hu/fogyasztovedelem/penzugyi-navigator-fuzetek

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Magyar Nemzeti Bank: Consumer protection recommendations in housing lending, Budapest, MNB, 2023.

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Magyar Nemzeti Bank: Consumer Protection Report 2022, Budapest, MNB, 2022.

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Magyar Nemzeti Bank: Digitalisation and FinTech Strategy 2022, Budapest, MNB, 2022.

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Magyar Nemzeti Bank: Revolut service warning, 9 March 2023.

Magyar Nemzeti Bank: Supervisory Report 2014, Budapest, MNB, 2014.

Magyar Nemzeti Bank: Sustainable Finance – Recommendation, Budapest, MNB, 2019.

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Magyar Nemzeti Bank: Thematic studies on financial markets, Budapest, MNB, 2022.

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OECD: G20 High-Level Principles on Financial Consumer Protection, 2011.

Footnotes

1. Magyar Nemzeti Bank: Consumer Protection Report 2023, Budapest, MNB, 2023, 5–22. ↑
2. Magyar Nemzeti Bank: Ten years of financial consumer protection – Report 2023, Budapest, MNB, 2023. ↑
3. Magyar Nemzeti Bank: Supervisory Report 2014, Budapest, MNB, 2014, 5–8. ↑
4. Magyar Nemzeti Bank: Consumer Protection Report 2014, Budapest, MNB, 2014, 3–10. ↑
5. See Miskolczi Bodnár Péter: A szolgáltatás árának megtévesztő reklámozása, különös tekintettel a közléshez szorosan kapcsolódó további árinformáció elhallgatására, elrejtésére, in Csák Csilla (Szerk.) Ünnepi Tanulmányok Prugberger Tamás Professzor 70. Születésnapjára, Miskolc, Novotni Alapitvány, 2007, 238–247. ↑
6. See Lentner Csaba: The Dynamics of Monetary Policy. Welcome by the Editor-in-Chief, Polgári Szemle, XVIII. évf., 2022/4-6, 10–13. ↑
7. See, OECD: Consumer Finance Risk Monitor, Paris, OECD Publishing, https://doi.org/10.1787/047b2ea6-en ↑
8. Magyar Nemzeti Bank: Consumer Protection Report 2023, Budapest, MNB, 2023, 13–24. ↑
9. See Lentner Csaba: A 2013 utáni jegybanki szabályozás aktuális kérdései, in Birher Nándor (et al.) (szerk.): Studia In Honorem István Stipta 70, Budapest, Károli Gáspár Református Egyetem Állam- és Jogtudományi Kar, 2022, 291–298. ↑
10. EIOPA: Consumer Trends Report 2022, Luxembourg, EIOPA, 2023, https://www.eiopa.europa.eu/document/
    download/b8e20202-b1f6-41a9-9df8-f3cf8a9e96f9_en?filename=Consumer%20trends%20report%202022.pdf ↑
11. Magyar Nemzeti Bank: Ten years of financial consumer protection – Report 2023, Budapest, MNB, 2023, 14–18. ↑
12. Magyar Nemzeti Bank: Consumer Protection Report 2022, Budapest, MNB, 2022, 10–14. ↑
13. Magyar Nemzeti Bank: Consumer Protection Report 2023, Budapest, MNB, 2023, 20–31. ↑
14. Financial Navigator Portal, Magyar Nemzeti Bank, https://www.mnb.hu/fogyasztovedelem ↑
15. Magyar Nemzeti Bank: Ten years of financial consumer protection – Report 2023, Budapest, MNB, 2023, 14–22. ↑
16. Magyar Nemzeti Bank: Digitalisation and FinTech Strategy 2022, Budapest, MNB, 2022, 19–21. ↑
17. See Lentner Csaba: A jegybanki szabályozás tanulságai a 2008–2015-ös időszakról – nemzetközi összehasonlító elemzés, Gazdaság és Jog, XXVI. évf., 2018/3, 6–11. ↑
18. Magyar Nemzeti Bank: Consumer Protection Report 2022, Budapest, MNB, 2022, 11–15. ↑
19. Magyar Nemzeti Bank: Consumer Protection Report 2023, Budapest, MNB, 2023, 24–28. ↑
20. Magyar Nemzeti Bank: Consumer protection recommendations in housing lending, Budapest, MNB, 2023. ↑
21. Magyar Nemzeti Bank: Thematic studies in the insurance intermediary sector, Budapest, MNB, 2022. ↑
22. Magyar Nemzeti Bank: Warning on Revolut service, 9 March 2023. ↑
23. See Miskolczi-Bodnár Péter: Fogyasztók megtévesztéssel szembeni védelme a pénzügyi szektorban, Pénzügyi Szemle, LIX. évf., 2014/1, 7–26. ↑
24. Magyar Nemzeti Bank: Consumer Protection Recommendation for Housing Lending, Budapest, MNB, 2023. ↑
25. Magyar Nemzeti Bank: Revolut service warning, 9 March 2023. ↑
26. Magyar Nemzeti Bank: Consumer Protection Report 2022, Budapest, MNB, 2022, 30–37. ↑
27. Magyar Nemzeti Bank: Digitalisation and FinTech Strategy, Budapest, MNB, 2022, 19–21. ↑
28. Magyar Nemzeti Bank: Thematic studies on financial markets, Budapest, MNB, 2022. ↑
29. Financial Navigator Portal, Magyar Nemzeti Bank, https://www.mnb.hu/fogyasztovedelem ↑
30. Magyar Nemzeti Bank: Consumer Protection Report 2023, Budapest, MNB, 2023, 38–43. ↑
31. OECD: G20 High-Level Principles on Financial Consumer Protection, 2011. ↑
32. EIOPA: Consumer Trends Report 2022, Luxembourg, EIOPA, 2023, https://www.eiopa.europa.eu/document/
    download/b8e20202-b1f6-41a9-9df8-f3cf8a9e96f9_en?filename=Consumer%20trends%20report%202022.pdf ↑
33. Financial Navigator Papers, MNB, https://www.mnb.hu/fogyasztovedelem/penzugyi-navigator-fuzetek ↑
34. Financial Conduct Authority: Regulatory sandbox lessons learned report, London, FCA, 2017, https://www.fca.org.uk/publication/research-and-data/regulatory-sandbox-lessons-learned-report.pdf ↑
35. Magyar Nemzeti Bank: Consumer Protection Report 2023, Budapest, MNB, 2023, 38–43. ↑
36. Magyar Nemzeti Bank: Sustainable Finance – Recommendation, Budapest, MNB, 2019. ↑
37. Magyar Nemzeti Bank: Green Programme, Budapest, MNB, 2021. ↑
38. Magyar Nemzeti Bank: Digitalisation and FinTech Strategy, Budapest, MNB, 2022, 19–21. ↑
39. Proposal for a Regulation of the European Parliament and of the Council Laying Down Harmonised Rules on Artificial Intelligence (Artificial Intelligence Act) and Amending Certain Union Legislative Acts, COM/2021/206 final. ↑
40. Financial Navigator Portal, Magyar Nemzeti Bank, https://www.mnb.hu/fogyasztovedelem ↑
41. Magyar Nemzeti Bank: Consumer Protection Report 2023, Budapest, MNB, 2023, 30–34. ↑
42. Ibid. 38–43. ↑