“Despite the many, well publicised problems, overall 2005 was a very successful year for the Austrian financial sector,” says FMA Executive Director Kurt Pribil on the release of the FMA’s 2005 annual report. Overall, Austria’s financial institutions increased their business volume, improved cost structures, generated higher revenues and significantly increased own funds. At the same time, the FMA also presented a comprehensive package of measures designed to optimise supervision under the “Better Regulation” banner. “We must shorten the intervals between on-site inspections, we need more auditors, in some areas stricter penalties and greater effectiveness at lower control levels,” says the second member of the FMA’s Executive Board Heinrich Traumüller.
With around 200 employees and a budget of almost € 20 million, the FMA supervised around 1,350 licensed companies in 2005. Added to which are trade in listed securities (8.3 million transactions) and derivatives as well as the supervision of over 359 issuers, 2,100 domestic and 3,500 foreign investment funds.
The FMA Executive Board highlighted four areas in particular in 2005:
- The development of the Central and East European strategy, which underlies the successful expansion of Austrian financial institutions into these markets. This involves entering into cooperation agreements with sister authorities in these countries, carrying out on-site inspections in collaboration with these authorities and playing the role of “Coordinating Supervisor” for certain financial groups.
- The reporting year witnessed the first successful use of the FMA’s arsenal of weapons against illegal insider dealing and market manipulation, which led to two cases of suspicion of illegal insider dealing (BAAG/Brau Union, Cybertron) being submitted to the public prosecutor’s office.
- An initiative geared towards increasing efficiency by raising synergy potential, streamlining internal workflows and optimising reporting procedures led to resource savings of four per cent.
- Eight employees will be deployed to handle the FMA’s newly assumed responsibility for the supervision of prospectuses and will develop a separate “Enforcement task force” to fight against the illegal – or criminal – provision of financial services.
Based on its experience during the first four years of supervisory activity and an analysis of current problems, the FMA has put together a comprehensive and precise package of measures under the “Better Regulation” banner. “We are constantly aware of the fine line between effective supervision and overregulation, so it is even more important for the authorities which answer to the FMA to work effectively,” says Traumüller. To ensure the greater autonomy of auditors, the FMA is therefore calling for their external rotation in 3-year cycles, stricter penalties for auditors who fail to meet their obligations and the professionalisation of supervisory board members, inter alia through a Fit and Proper test for their chairperson. The FMA is calling for more regular on-site inspections, which would require an additional 60 members in the auditor team. A separate package of measures has been put together to optimise the deployment of state commissioners (improved training, FMA information platform, standardised and more prompt reporting). Risk-based reporting is also being further developed.
“In a market economy, it must be possible for institutions which are no longer competitive to withdraw from the market,” says Pribil. “It is therefore our responsibility to make sure that this happens without rocking the stability of the financial market. Which means we must do everything we can to identify problems as early as possible, and we have to accompany institutions as they penetrate new markets and launch new products.”
For further information please contact
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-5106
+43/(0676)/882 49 516