Tasks of the FMA

The Financial Market Authority’s tasks are defined by a number of individual laws. Two distinct supervisory approaches apply – referred to as “solvency supervision” and “market and conduct supervision”.

The objective of solvency supervision is to ensure that the banks, insurance undertakings and financial service providers are able to pay out at all times and to meet their contractual obligations.

Market and conduct supervision is intended to ensure fair and transparent business conditions and to monitor compliance with minimum standards in governance as well as in the advice and information provided to customers.

Furthermore, particular importance is also placed on combating unauthorised banking, insurance and financial services business, as well as preventative measures against money laundering and terrorist financing.

Areas of Supervision

Supervision of the Austrian financial market is handled by three core departments: banking supervision, insurance and Pensionskassen (pension companies) supervision and securities supervision.

Credit institutions form the focal point of banking supervision. However, payment institutions also fall within the competence of this department, due to the similar requirements placed upon them under supervisory law.

The Banking Supervision department handles:

  • licensing, approval and notification procedures
  • official supervisory procedures
  • official supervision of banks’ internal models
  • instructing the Oesterreichische Nationalbank to conduct on-site inspections
  • monitoring of corrective action taken by credit institutions
  • legal interpretation of matters specific to banking supervision
  • analysing and gathering qualitative information
  • evaluation of the results of analyses with regard to official steps to be taken
  • Involvement in shaping banking supervision regulation
  • representation in international committees in relation to banking supervision
  • supervisory issues regarding the branches and representative offices of foreign credit institutions
  • cross-border supervision by means of the concept of consolidating supervision.

Insurance and Pensionskassen (pension companies) supervision in particular focuses on:

  • ongoing monitoring of all activities of insurance undertakings and Pensionskassen including on-site inspections
  • proposals for regulatory developments in relation to insurance and Pensionskassen supervision
  • representation in international committees within the department’s scope in relation to licensing issues and legal supervision

Securities supervision consists of the following:

  • monitoring of credit institutions’ reporting obligations regarding instruments subject to notification obligations
  • supervision of markets and stock exchanges
  • supervision of issuers
  • licensing and ongoing supervision of investment services providers (ISPs) and undertakings for collective investments
  • investigations in relation to securities and relevant cooperation with Criminal Intelligence Service Austria, the respective police agencies (Bundespolizeidirektionen), the Public Prosecutor’s Office (Staatsanwaltschaft), the courts and other authorities
  • Supervision about the observance of conduct rules and compliance rules
  • Proposal of legislative developments in relation to securities supervision
  • representation in international committees in relation to banking supervision

Bank Resolution

The FMA assumed the additional role as national resolution authority under the “Federal Act on the Recovery and Resolution of Banks” (BaSAG), with effect from 1 January 2015. Consequently, in the event of the default or the threat of default of an institution, it is responsible for the institution’s order resolution to ensure financial market stability.

The Banking Resolution department is currently developing and drawing up preventive resolution plans to allow their implementation in the event of a bank being placed into resolution by applying the instruments at their disposal.

Since 1 January 2016, the FMA in its capacity as the national resolution authority, has also been part of the European system for bank resolution. A separate resolution authority – the Single Resolution Mechanism (SRM ) – has been established on a European level for banks that are subject to direct supervision by the European Central Bank within the Single Supervisory Mechanism (SSM ). The SRM makes significant decisions for the significant institutions (in cooperation with the European Council and the European Commission), but in the execution of these decisions has to draw upon the respective national resolution authority.

Protection of Consumers, Investors and Creditors

The FMA ’s most important contribution to the protection of consumers, investors and creditors is monitoring the capital banks and observance of legal conduct rules by banks, insurance undertakings, Pensionskassen and investment services providers, thereby ensuring a stable Austrian financial sector. Furthermore, the Financial Market Authority is committed to prevailing transparency and fairness in the Austrian capital market. The FMA , however, is not a consumer protection organisation in its classical sense. In order to ensure the necessary distance of the supervisory authority equally towards all market participants, the FMA does not have any legal means to provide assistance to parties making a complaint in assert compensation claims under civil law.

The FMA takes every complaint made by consumers, investors or credits against market participants seriously. Information and complaints made against market participants are an important source of information for supervision purposes. The FMA ‘s complaint handling and consumer hotline provide information about the legal options and follows up about all information received in relation to relevant undesirable developments or potential breaches of supervisory standards.

The legislator does not treat complainants as parties in the investigative procedures and administrative penal proceedings conducted by the FMA and they are also not given any access rights to files. Official secrecy, to which the FMA ’s bodys and employees are all subject, forbids the disclosure of information about the progress or outcome of investigations. Courts, however, are able to obtain such information by means of administrative assistance.

Further information about consumer protection issues can be found on our Let’s talk about money microsite.