“2010 was the year in which the real economy recovered again after the global financial crisis. However, the difficulties facing many state budgets mean that the financial markets remain fragile,” was the conclusion reached by the Executive Directors of the Financial Market Authority (FMA), Helmut Ettl and Kurt Pribil, speaking at the presentation of the FMA’s Annual Report for 2010. In what remained a difficult environment, economic policy had, they said, proved its worth. Whilst crisis management at a European level had worked well, the lessons from the crisis were now being implemented step by step. The FMA Executive Directors referred to such examples as the creation of the new European supervisory system, the supervision of hedge funds and credit rating agencies, and the new supervisory regimes applicable to banks and insurance undertakings in the form of Basel III and Solvency II.
Pribil and Ettl also explained how the FMA had worked in 2010 to intensify its supervisory activity even further, despite the difficult context:
- The number of on-site inspections carried out as part of the supervisory system increased further in 2010, climbing to 228 compared with 216 during the previous year. Compared with the total of 84 on-site inspections conducted in 2007, the year prior to the last reform of Austria’s supervisory system, the number has more than doubled. The biggest increase in 2010 was recorded in relation to combating unauthorised business, with a rise from 31 (2009) to 53 on-site inspections.
- In line with the strong increase in inspection activity, there has also been a clear rise in the number of sanctions imposed, up from 454 (2009) to 547. Compared with the 161 sanctions imposed in 2007, prior to the reform, the number has therefore more than tripled. Whilst the number of penal orders remained more or less unchanged at 302 (2009: 314), the number of penal decisions rose from 131 (2009) to 240.
- The FMA has also for the first time published the figures in relation to fines. Fines resulting from all penal decisions totalled €1.24 million in 2010, equating to an average penalty of €5,167. Penal orders resulted in fines of €160,000, which equates to an average amount of €530.
- The number of cases reported to the public prosecutor’s office, at 74, fell slightly (2009: 86).
The FMA stepped up its supervisory work in this way during the year under review with 282 employees (+7 compared with 2009) and a budget of €38.5 million (2009: €33 million) at its disposal. The FMA’s supervisory activities were financed as follows: €3.5 million in the form of the statutory lump sum paid from the federal budget, €3.7 million from fees and other income, and €31.2 million contributed by the supervised entities according to the share of costs incurred in each case.
The FMA Executive Directors used three issues of relevance to consumers to highlight how supervisory activity has been intensified:
- Limiting risk with regard to foreign currency loans: Since the issuing of new foreign currency loans was stopped at the end of 2008, it has been possible to reduce the outstanding volume – adjusted to take account of exchange rate effects – by 14% as at the 2010 year-end.
- Improvement in the quality of investor advice: The consistent implementation across Austria of the strict provisions of the 2007 Wertpapieraufsichtsgesetz (WAG 2007; Securities Supervision Act) has led to a reduction in the number of licensed investment service providers (from 326 in 2006 to 193 by the end of 2010), whilst also contributing to a tangible increase in the quality of advisory services in the supervised sector.
- In its ongoing fight against the unauthorised provision of financial services, the FMA increased the number of on-site inspections from 31 to 53 in the space of one year. In total, 40 investor warnings were published, 33 penal decisions were adopted, 19 offences were reported and 36 administration decisions prohibiting business were issued in 2010.
“In line with our motto ‘Competence – control – consistency’ we will continue to work this year to intensify our supervisory efforts even further,” declared FMA Executive Directors Helmut Ettl and Kurt Pribil, as they looked forward to 2011. They stressed, however, the importance of implementing the lessons learned from the global financial crisis quickly and efficiently and without watering down their impact. The Executive Directors reminded their audience that much had already been done, with the creation of the new financial supervisory system for Europe, the incorporation of credit rating agencies and hedge funds into the supervisory system, and the imminent adoption of new supervisory regimes for banks and insurance in the form of Basel III and Solvency II. They also stressed the importance of progressing in other areas without delay, particularly with regard to a viable restructuring and reorganisation process for financial institutions, in other words, special insolvency laws for banks.
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0676)/882 49 516