In 2023, just over 3,000 citizens contacted the Consumer Information point at the Austrian Financial Market Authority (FMA) seeking advice. Around a quarter of those seeking advice made complaints about an entities supervised by the FMA, while three quarters made enquiries with a general question about the Austrian financial market or a specific financial service. The enquiries and complaints in particular related to accounts and payments, investments and securities, financing in the form or real estate and consumer loans as well as life and non-life insurance products. More than one-third of all submissions – approximately 1,100 – related to the suspicion of investment fraud, which was a 37% increase compared against the previous year. In the year just ended, 432 submissions were made using the FMA-Whistleblower-System, which is generally used by persons inside of supervised entities or the market to report irregularities anonymously, an increase of 195 submissions or +82.3%. Of these, 234 actually relation to the FMA’s scope of supervision, 113 related to tax offences, and 85 related to areas of supervision supervised by other authorities or proved to be without substance.
Submissions about investment fraud have been increasing constantly for a number of years
The number of submissions voicing a suspicion about investment fraud have increased continually for a number of years. One slight positive note in this regard, was that only one in four stated that they had already been the victims of fraud. The largest loss reported to the FMA by a victim of fraud in 2023 was for € 1,601,400. The average reported amount lost was around € 45,000. In total, losses of € 13 million were reported to the FMA in 2023 as a result of investment fraud, around one-third higher than in the previous year.
“Submissions about suspected investment fraud are often made rapidly, making it possible for the FMA to also act in a preventive manner,” remarked the FMA’s Executive Directors, Helmut Ettl and Eduard Müller: “This is why we published a large number of investor warnings during the past year, and report on an ongoing basis about the currently popular methods used by fraudsters, and provide easy to understand information that advises consumers how they can protect themselves against fraudsters.”
Authority fraud was the most common method of fraud in 2023 – accounting for 44%. Fraudsters claim to be employees of an authority, such as the FMA, to lure consumers into a fraudulent trap. 30% of all cases related to fraud methods involving investments in traditional securities and participating interests. Whereas more than half of all cases of fraud in 2020/21 were in relation to crypto-assets, the level of fraud in this category has reduced significantly in the last two years: in 2023, it represented only 23%.
Whistle-blowers, an important source of information for the FMA
Out of the 234 whistle-blower reports that fell within the FMA’s scope of supervision, 67 related to suspected investment fraud, 60 to banking and lending business, 60 to securities supervision, 15 to the insurance industry or pension companies (Pensionskassen[/lang), nine to the suspicion of money laundering and two to infringements against orderly accounting practices. 21 qualified as complaints about general supervision issues. It is noticeable that the reports about breaches in the securities sector have risen significantly for a number of years.
The reports in relation to banking supervision primarily related to the fitness and propriety of holders of key functions, such as specific directors or non-executive directors, to deficiencies in an entity’s transparency and governance, as well as reporting requirements that had not been met, and a lack of reporting. In the area of securities supervision, the reports primarily dealt with breaches of the obligation to publish a prospectus, as well as marketing, distribution and selling of financial products that was grossly detrimental for clients. Reports in relating to the supervision of markets and stock exchanges suggested alleged insider trading, market manipulation and breaches of ad hoc reporting requirements. In the insurance industry the reports focussed on deficiencies in observing pre-contractual information requirements as well as governance issues, in particular the fitness and propriety of key function holders.
“Our web-based whistle-blowing platform is an important source of information for the supervisor. Reports made through it often uncover severe irregularities in supervised entities. The platform guarantees the reporting person absolute anonymity, while at the same time an anonymous mailbox allows anonymous communication between the authority and the whistle-blower,” remarked the FMA’s Executive Directors Helmut Ettl and Eduard Müller: “It allows irregularities to be detected at an early stage, thereby limiting the extent of or even preventing damage from occurring.”
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43 (0)1 249 59 – 6006
+43 (0)676 – 88 249 516