BaFin the integrated financial supervisor

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1 BaFin About us

2 BaFin the integrated financial supervisor The Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht BaFin) supervises credit institutions, financial and payment service providers, insurers, Pensionsfonds, asset management companies and securities trading. The objective of financial supervision is to ensure the proper functioning, stability and integrity of the German financial market. Bank customers, insurance policyholders and investors ought to be able to trust the financial system. For that reason, BaFin seeks to ensure that market participants comply with the relevant laws. BaFin is a public-law institution with legal capacity. BaFin is funded solely by fees and contributions from the institutions and businesses that it supervises and is thus independent of the federal budget. It employs around 2,700 staff who work at its offices in Bonn and Frankfurt am Main. BaFin is managed by its Executive Board consisting of President Felix Hufeld and the Chief Executive Directors of each of BaFin s five directorates: Banking Supervision (Raimund Röseler), Insurance and Pension Funds Supervision (Dr Frank Grund), Securities Supervision/ Asset Management (Elisabeth Roegele), Resolution (Dr Thorsten Pötzsch) and Internal Administration and Legal Affairs (Béatrice Freiwald). BaFin s functions With its solvency supervision, BaFin contributes to ensuring that credit institutions, insurers and financial services providers are able to meet their payment obligations. In addition, BaFin s supervision of the market aims to safeguard fair and transparent conditions on the markets and furthermore to protect

3 the general body of consumers. Such protection extends to all products and financial services that are subject to BaFin s supervision. BaFin is also tasked with preventing the financial system from being abused for the purposes of money laundering or the financing of terrorism. To this end, BaFin ensures, for example, that the companies it supervises comply with the applicable requirements for the prevention of money laundering and terrorist financing. In Germany, banking, financial services and insurance businesses may not be conducted without official authorisation. BaFin oversees this prohibition and possesses far-reaching powers of investigation and intervention for this purpose. BaFin is represented in numerous European bodies and thus engaged in the creation of a single European financial market. Furthermore, through its participation in international bodies, BaFin is involved in the formation of global supervisory standards. Banking supervision Only a stable financial system can provide the financial resources that a national economy requires. Banking supervision makes a major contribution in this regard. Since 4 November 2014, BaFin has been part of the Single Supervisory Mechanism (SSM), which is led by the European Central Bank (ECB). The SSM directly supervises the eurozone s approximately 120 significant institutions and groups of institutions (SIs), including around 20 from Germany. This is done in Joint Supervisory Teams, in which BaFin staff work side by side with supervisors from throughout the eurozone. The less significant institutions (LSIs) of which there are around 1,630 in Germany are supervised by the SSM indirectly; they are therefore subject to national supervision as was previously the case.

4 BaFin seeks to ensure that only authorised companies offer their services on the market and that these companies are managed by directors who have proved that they have the necessary professional qualifications and are fit and proper; and the institutions conduct their business in a proper manner and comply with all relevant statutory and supervisory provisions. One of the most important principles is that banks must have an adequate capital cushion to cover the risks that they assume. However, banking supervision is not responsible for preventing each and every insolvency. If a bank becomes insolvent, the statutory deposit guarantee schemes ensure that customers do not lose all of their deposits. These schemes are also supervised by BaFin. If BaFin determines that a compensation event has occurred, the compensation procedure can begin. The question of whether and to what extent claims exist, however, is not determined by BaFin, but by the relevant guarantee scheme. BaFin s Resolution Directorate If the threat to an institution s continued existence cannot be averted by supervisory means and there is a threat to financial stability, then BaFin, as national resolution authority, also has far-reaching powers of intervention. Within the scope of its responsibilities, this agency may wind up institutions without risk to the stability of the financial market. Insurance supervision In the case of insurance, trust is of particular importance as the basis for business. Customers expect their private insurer to be a reliable contractual partner often over a very long period of time. 4

5 BaFin seeks to ensure that the interests of policyholders remain protected and that insurers can meet their contractual obligations at all times. It therefore fulfils an important economic and social function. BaFin ensures that only authorised insurance undertakings operate on the market and that these businesses are managed by directors who have proved that they have the necessary professional qualifications and are fit and proper; and insurers conduct their business in a proper manner and comply with all relevant statutory and supervisory provisions. In particular, undertakings have to invest their capital in a manner appropriate to the risks they assume, i.e. safely and profitably. 5

6 Securities supervision In order for securities trading to function smoothly, it is important that all market participants can rely on fair and transparent market conditions being in place. If market manipulation or insider trading is suspected, BaFin thoroughly pursues the matter. In addition, it monitors listed companies and their shareholders for compliance with their respective publication requirements. Among other things, companies must publish ad hoc announcements, directors dealings and financial reports. Shareholders are subject to a reporting requirement if they hold significant percentages of the voting rights in a listed company. Anyone who holds 30% or more of the voting rights must make an offer to the other shareholders to buy their shares. In addition, securities supervision also monitors financial services providers, asset management companies and the collective investment undertakings that they set up. Moreover, BaFin also examines prospectuses, including listing prospectuses, and checks whether they contain the minimum information required. BaFin s is not responsible for examining the factual correctness of theprospectuses content. Together with the Financial Reporting Enforcement Panel (FREP, Deutsche Prüfstelle für Rechnungslegung DPR), BaFin also examines the accounting of publicly traded companies (of which there are approximately 560). Such enforcement of financial reporting requirements supplements each company s internal audit of accounting by its supervisory board and external auditors. Collective consumer protection Collective consumer protection is also one of BaFin s core tasks and extends to all the financial products and 6

7 services that it deals with in its supervisory capacity. The objective here is the protection of consumers as a whole. When it comes to the enforcement of claims by individual consumers, however, BaFin must refer people to the competent ombudspersons, arbitration bodies and courts. There is only one exception: if a consumer has the right to open a basic payment account, BaFin can enforce such claims in individual cases. Within the context of collective consumer protection, BaFin endeavours to ensure, amongst other things, that the range of financial products, insurance products and financial services on offer is transparent and comprehensible. BaFin answers around 20,000 enquiries per year on its consumer helpline (phone: +49 (0) ). In addition, it receives around 18,000 written enquiries and complaints per year about banks, insurance undertakings and financial services providers. Furthermore, BaFin monitors market developments and analyses what consequences they might have for consumers. Further information can be found on BaFin s website ( Here you can find, for example, basic information on investments and securities transactions. Information of particular relevance to consumers can also be found in the Consumers section. If you would like to complain about a company or are seeking arbitration for a dispute with a credit institution or financial services provider, you can find out how to proceed on the BaFin website. Here you can also find the legal foundations of financial supervision and lists of authorised businesses and prospectuses filed. 7

8 The BaFin consumer helpline can be contacted from 8.00 a.m. to 6.00 p.m. Monday to Friday at +49 (0) Published by Federal Financial Supervisory Authority Group Communications Graurheindorfer Straße 108, Bonn Marie-Curie-Straße 24-28, Frankfurt am Main Phone: +49 (0) Fax: +49 (0) Consumer helpline: +49 (0) Internet: Bonn und Frankfurt am Main July 2018 Photos: BaFin/Frank Beer