Conduct Supervision
Conduct Supervision
The FMA’s conduct supervision monitors financial services providers’ observance of conduct and distribution rules, and ensures that clients are treated fairly, transparently and in accordance with legal rules. The focus of conduct supervision of banks consists in particular of banking services, investment services, insurance mediation as well as the activity of credit servicers under the Credit Servicers and Credit Purchasers Act (KKG; Kreditkäufer- und Kreditdienstleister-Gesetz). The underlying legal provisions, the FMA’s three tier supervisory strategy as well as relevant European rules and statements are explained in greater detail below.
Austrian Banking Act (BWG; Bankwesengesetz)
Compliance and conduct requirements relating to the provision of banking services and when selling banking products are anchored in the Austrian Banking Act (BWG; Bankwesengesetz) These include requirements in relation to complaints management as well as remuneration policy and practices.
In the area of loan origination – especially regarding real estate lending – there are also far-reaching Conduct rules in relation to real estate loans. These range from principles regarding the granting of credit and valuation of residential property, through requirements about the qualification (in terms of knowledge and skills) of customer advisers through to rules for credit checks, and handle of payment arrears and foreclosures.
Payment Services Act (ZaDiG 2018; Zahlungsdienstegesetz 2018)
The Payments Services Act 2018 (ZaDiG 2018; Zahlungsdienstegesetz 2018) regulates the conduct rules and obligations when providing payment services in particular detail. In particular, they include
- information requirements (Chapter 3)
- rights and obligations when providing and using payment services (Chapter 4)
- as well as requirements for the effective complaints management (Chapter 5).
The European Commission has made a leaflet available pursuant to Article 38 ZaDiG 2018 to inform consumers about their rights when making cross-border payment transactions. This leaflet can be found here:
Consumer Payment Accounts Act (VZKG; Verbraucherzahlungskontogesetz)
The VZKG contains specific conduct rules in relation to payment accounts for consumers. The key information is:
- Payment service providers’ information obligations
- Comparability of charges for consumer payment accounts
- Switching consumer payment accounts
- as well as the discrimination-free access to payment accounts with basic functions.
Conduct Supervision of Banks: The FMA’s three tier supervisory strategy
Within its framework for the conduct supervision of banks, the Austrian Financial Market Authority (FMA) ensures that credit institutions consistently observe conduct provisions laid out under law.
It uses a proven three tier supervisory strategy to create transparency, promotes acting responsibly in the market and thereby protects consumers effectively. The strategy consists of
- targeted market monitoring to identify potential risks and vulnerabilities at an early stage,
- structured dialogue with institutions and stakeholders, which enables continuous exchange of views and a preventive approach to problem solving,
- specific inspections of individual legal entities, in order where necessary to take targeted measures and to enforce compliance with the rules.
The FMA uses various supervisory tools such as examinations and management talks to implement this strategy. Such actions allow factual circumstances to be clarified, compliance with regulatory requirements to be checked, and current market standards to be assessed. At the same time it also ensures continuous and constructive supervisory contact. The FMA’s holistic and proactive approach allows it to make an effective contribution to protecting the market integrity and strengthening customer confidence in the banking system.
Securities Supervision Act 2018 (WAG 2018; Wertpapieraufsichtsgesetz 2018)
Credit institutions that provide also investment services on the basis of their legal licence pursuant to Article 1 para. 3 BWG such as investment advice, portfolio management on an individual basis and/or the receiving and transmission of orders (Article 3 para. 2 nos. 1 to 3 WAG 2018), are required to comply with Chapter 2 (Organisational Requirements) of the Securities Supervision Act 2018 (WAG 2018; Wertpapieraufsichtsgesetz 2018) including directly applicable EU Regulations, in particular Delegated Regulation (EU) 2017/565). The most material organisational requirements include:
- establishing and maintaining a permanent compliance function,
- as well as compliance with comprehensive conduct rules when providing investment services.
PRIIPs Regulation
Credit institutions that manufacture packaged retail investment products or that distribution such products or insurance-based investment products, are required to observe the provisions of the PRIIPs Regulation (Packaged Retail and Insurance-based Investment Products Regulation), the PRIIP Enforcement Act (PRIIP-VG; PRIIP-Vollzugsgesetz) as well as directly applicable EU regulations (especially Delegated Regulation (EU) 2017/653).
The central requirements include the manufacturer’s obligation to draw up a Key Information Document (KID) for every product. This KID contains clear and easy-to-understand information about the product’s most important features, risks and charges.
Distributors are responsible for ensuring that the KID is made available to retail investors in a timely manner prior to the conclusion of the contract, to allow them to reach a well-founded investment decision.
Sustainability and Disclosure
When providing investment services, credit institutions are required to meet a range of regulatory requirement in relation to sustainability.
The standards contained in Delegated Regulation (EU) 2017/565 as well as Articles 30 and 31 of the Securities Supervision Act 2018 (WAG 2018; Wertpapieraufsichtsgesetz 2018) in particular are relevant for distribution of securities. The following obligations are among the rules that arise from these legal acts:
- Consideration of sustainability risks in organisational distribution rules
- Determining the target market in the field of product governance, including stating the sustainability-related investment objectives that a financial instrument addresses,
- Obtaining and considering a client’s sustainability preferences when providing investment advice.
Furthermore, credit institutions that fall under the scope of the Disclosure Regulation (EU) 2019/2088 (SFDR), (such as financial market participants pursuant to Article 2 (1) lit. j or financial advisers pursuant to Article 2 (11) lit. c SFDR), are obliged to fulfil transparency obligations.
In particular, this includes the disclosure of information about sustainability risks, adverse sustainability impacts, and product-related sustainability information on websites, in the remuneration policy, in pre-contractual information and in regular reporting.
More detailed information may be found at:
Sustainable Finance
Sustainability in Distribution
ESMA Questions & Answers (ESMA Q&As)
ESMA Q&As are documents issued by the European Securities and Markets Authority (ESMA) for interpretation and clarification purposes in relation to rules under EU law in relation to financial markets.
Their purpose is to:
- ensure the harmonised application of European legislation,
- answer questions asked by national supervisory authorities, market participants or professional associations.
- create legal clarity for institutions and supervisors.
Q&As are not legally binding, but provide authoritative guidance on ESMA’s supervisory interpretation and expectations. The FMA applies them as a supervisory benchmark. ESMA Q&As are updated on an ongoing basis.
ESMA Statements
ESMA Statements are official communications issued by the European Securities and Markets Authority (ESMA) in which it presents its supervisory perspective regarding specific topics or developments in the financial market.
Depending on their objective, ESMA Statements may:
- react to current market circumstances or risks that are relevant for supervision (e.g. market volatility, geopolitical events),
- clarify supervisory expectations on specific topics (e.g. in implementing regulatory standards),
- serve as guidance for national supervisory authorities and market participants,
- or contribute towards a harmonised application of the European financial market regulatory framework.
Unlike ESMA Q&As, which respond to specific individual questions, ESMA Statements often have a broader basis, address general topics and may also have a preventive or market-stabilising character. They are also not legally binding, but are however regularly applied by the FMA as a supervisory benchmark.
ESMA Statement zu fractional shares (Format: pdf, Size: 104,0 KB, Language: English)
ESMA Statement zu RTS 27 Reports (Format: pdf, Size: 44,7 KB, Language: English)
ESMA Statement zu Payment for Order Flows (Format: pdf, Size: 130,2 KB, Language: German)
FMA Circulars
Conduct Supervision of Banks: The FMA’s three tier supervisory strategy
Within its framework for the conduct supervision of banks, the Austrian Financial Market Authority (FMA) ensures that credit institutions consistently observe conduct provisions laid out under law.
It uses a proven three tier supervisory strategy to create transparency, promotes acting responsibly in the market and thereby protects consumers effectively.
The strategy consists of
- targeted market monitoring to identify potential risks and vulnerabilities at an early stage,
- structured dialogue with institutions and stakeholders, which enables continuous exchange of views and a preventive approach to problem solving,
- specific inspections of individual legal entities, in order where necessary to take targeted measures and to enforce compliance with the rules.
The FMA uses a broad spectrum of supervisory tools in conducting its conduct supervision, to ensure that legal requirements are met, and to steer market conduct in a sustainable manner.
On-site inspections are a key tool:
- pursuant to Article 90 para. 3 no. 3 WAG 2018 with regard to the provision of investment services.
- as well as pursuant to Article 4 para. 1 PRIIP-VG with regard to the obligations set out in the PRIIPs Regulation.
Such measures are effectively complemented by spot checks and management talks. They have multiple purposes: identification of specific factual circumstances on a case-by-case basis, regular reviews as well as for surveying market standards. There is a specific focus on maintaining an ongoing and constructive contact by the supervisor with supervised institutions.
In addition, management talks and spot checks are used in a targeted manner as follow-up measures – such as following an on-site inspection, for clarifying any open issued, for accompanying measures for rectifying identified shortcomings, and to ensure that improvements are made in a sustainable manner.
The FMA’s holistic and proactive approach to supervision allows it to make an effective contribution to protecting the market integrity and strengthening customers’ confidence in the banking system.
The Insurance Distribution Direction (IDD) as well as the delegated regulations based thereon contain conduct supervision rules for insurance mediation that are generally carried over from MiFID II and the Securities Supervision Act 2018 (WAG 2018).
Pursuant to Article 21 para. 4 BWG credit institutions are required in the mediation of insurance contracts and insurance-based investment products in particular to observe the relevant rules set out in the Commercial Code of 1994 (Article 69 para. 2, Articles 1367 et seq.) as well as the national regulations issued on this basis (e.g. Professional rules for insurance mediation).
Conduct Supervision of Banks: The FMA’s three level supervisory strategy
Within its framework for the conduct supervision of banks, the Austrian Financial Market Authority (FMA) ensures that credit institutions consistently observe conduct provisions laid out under law.
It uses a proven three level supervisory strategy to create transparency, promotes acting responsibly in the market and thereby protects consumers effectively.
The strategy consists of:
- targeted market monitoring to identify potential risks and vulnerabilities at an early stage,
- structured dialogue with institutions and stakeholders, which enables continuous exchange of views and a preventive approach to problem solving,
- specific inspections of individual legal entities, in order where necessary to take targeted measures and to enforce compliance with the rules.
On-site inspections pursuant to Article 21 para. 5 BWG are a key tool for insurance mediation conducted by credit institutions.
Such measures are effectively complemented by spot checks and management talks. They have multiple purposes: identification of specific factual circumstances on a case-by-case basis, regular reviews as well as for surveying market standards. There is a specific focus on maintaining an ongoing and constructive contact by the supervisor with supervised institutions.
In addition, management talks and spot checks are used in a targeted manner as follow-up measures – such as following an on-site inspection, for clarifying any open issued, for accompanying measures for rectifying identified shortcomings, and to ensure that improvements are made in a sustainable manner.
The FMA’s holistic and proactive approach to supervision allows it to make an effective contribution to protecting the market integrity and strengthening customers’ confidence in the banking system.
The Credit Servicers and Credit Purchasers Act (KKG; Kreditkäufer- und Kreditdienstleister-Gesetz) contains specific conduct requirements for credit servicers and credit purchasers in relation to borrower protection. The core contents are:
- Credit purchasers and credit servicers are required to act in good faith in an honest and professional manner.
- Information that is made available to the borrower shall not be allowed to be misleading, unambiguous or incorrect.
- Borrowers’ personal information and privacy are to be respected and protected;
- Communication with borrowers shall not be permitted to be of a harassing nature or to unduly influence borrowers.
- The borrower’ individual financial situation is to be considered. If necessary, borrowers should be referred to debt counselling services.
- Credit servicers may create an opportunity for borrowers to make a complaint free-of-charge, and must establish a transparent complaints process in their company.
More detailed information may be found on the page about Credit Servicers and Credit Purchasers.
Further Information from the FMA
Integrated Banking Distribution Report
The Integrated Banking Distribution Report provides an annual overview about distribution activities of Austrian credit institutions in Austria based on the respective material legal bases.
The data, key figures and market performance demonstrate the role of credit institutions in sales of lending, insurance and investment products, in particular to consumers or retail investors in Austria.
Integrated Banking Distribution Report 2024 (Format: pdf, Size: 1,6 MB, Language: English)
Integrated Banking Distribution Report 2023 (Format: pdf, Size: 1,9 MB, Language: English)
Integrated Banking Distribution Report 2022 (Format: pdf, Size: 1,1 MB, Language: English)
PRIIPS Market Report (in German only)
Marktanalyse PRIIPs-KID 2024 (Format: pdf, Size: 336,7 KB, Language: German)
FMA Workshop on Compliance and Anti-Money Laundering
The FMA Workshop on Compliance and Anti-Money Laundering is a central platform for information and dialogue for compliance officers, anti-money laundering officers as well as other experts and management staff from the financial sector.
The FMA Workshop focuses on current supervisory expectations, changes in legislation and practical challenges in the areas of prevention of money laundering, combating terrorist financing, internal control systems as well as conduct and organisational requirements.
The FMA’s experts provide insights about supervisory priorities, current findings from on-site inspections as well as developments regarding supervisory law. The programmes is also rounded off by practical experiences in relation to supervision as well as opportunities for exchanges across sectors.
The FMA Workshop on Compliance and Anti-Money Laundering promotes dialogue between the supervisor and market participants and supports institutions in implementing regulatory requirements in the area of compliance in an effective manner.