Last Update: 15.02.2011
History of the FMA
Austria’s Financial Market Authority (FMA) took up the operational roles defined in the Finanzmarktaufsichtsbehördengesetz (FMABG; Financial Market Authority Act) as an independent authority on 1 April 2002. The legislation had been passed following long political discussions on the establishment of an integrated financial supervisory authority during the summer of 2001. The Act defines the FMA as an institution under public law, with its own distinct legal personality. It was tasked with the supervision of banks, insurance undertakings, Pensionskassen (pension companies) and the entire financial securities sector.
The necessity for reform of the old structures of supervision for the financial market arose out of a combination of factors. Firstly, international regulatory frameworks had changed, through the Basel Core Principles, for example. Secondly, the growing phenomenon of globalisation in financial markets was entailing expansion of inspection and supervisory activities, and greater international cooperation between supervisory authorities. At the same time, new developments in the world of finance, such as the increasing complexity of financial services, the greater integration of companies that are subject to supervision and the various mergers and buyouts in the banking, securities and insurance services sectors to form financial conglomerates have presented financial market supervisors with new challenges.
With effect from 22 October 2001, the Federal President of Austria appointed Andreas Grünbichler – at that time teaching at the University of St. Gallen and Director of the Swiss Institute for Banking and Finance – and Kurt Pribil – head of the Foreign Research Division of the Oesterreichische Nationalbank (OeNB) – as the founding Executive Directors of the FMA.
A decision of the Constitutional Court on 12 December 2001 indirectly withdrew the legislative basis for the FMA, as it considered the FMABG to have exceeded the constitutional restrictions on the entrustment of functions to institutions that have been spun off from the government. For this reason, the Act was revised in March 2002, by a comprehensive parliamentary amendment that was accepted by members of all parties represented in the full plenary session of the National Council. The amendment secured the FMA as an independent and autonomous supervisory authority subject to monitoring by the parliament in line with other international examples, and in accordance with the constitution. At the same time, the cooperation between the FMA and the OeNB in relation to banking supervision has been put on a legal foundation.
On 1 April 2002, the banking, insurance and pension company supervision activities within the Federal Ministry of Finance were merged with the Austrian Securities Authority and transferred to the new authority. With this reorganisation, the previous sector-based structure of supervisory activities (split according to savings banks, cooperative banks, joint stock banks and bankers, etc.) was discarded in favour of a functional approach that reflects the core functions of the financial system.
From July 2002, the government conferred on the FMA a new, additional task with the Bundesgesetz über die Betriebliche Mitarbeitervorsorge (BMVG; Federal Act on Corporate Staff Provision) entering into force. In August of that year, the FMA took out a lease on a building at Praterstraße 23 in central Vienna, accommodating staff who had previously worked in the institution’s four sites together under one roof.
In autumn 2002, a revision of the Einkommenssteuergesetz (EStG; Income Tax Law) (Article 108g, h) created a new form of tax relief for private pensions, the “state-sponsored retirement provision” which fell under the supervisory auspices of the FMA. With effect from 1 April 2003, the FMA issued a Compliance Code that created the organisational framework to allow the authority to prevent insider dealings by any of its bodies or employees.
Early in the summer of 2003, the Austrian National Council passed the Immobilien-Investmentfondsgesetz (ImmoInvFG; Real Estate Investment Fund Act), which came into effect from 1 September of the same year. As a result, since this date the scope of activity and supervision of the FMA has been expanded to include supervision of prospectuses and financial conglomerates, combating unauthorised business and the supervision of payment institutions.
In 2008, the reforms of the supervision of the financial market in Austria came into force, creating clearly defined interfaces between the FMA and the OeNB. This has eliminated duplication of work, and has given both institutions significantly greater resources for the analysis and investigation of banks and for work in the area of financial securities supervision. A comprehensive package of corporate governance measures has reinforced supervisory activities in Austria.
At the beginning of 2010, the FMA and its staff moved into new offices at Otto-Wagner-Platz 5. From 2011, the FMA will have new areas of activity including supervision of rating agencies and the prevention of money laundering and terrorist financing.
