Erscheinung:12.05.2015 BaFin President: Insurers may need one-on-one defence coverage
"Adjusting to Solvency II is definitely going to be an uphill battle for German insurers even though transitional provisions and volatility adjustments are now provided for in the regulatory framework." This was the message from BaFin President Felix Hufeld at the supervisory authority's annual press conference held on 12 May in Frankfurt am Main. Hufeld added that if interest rates continue to remain this low, BaFin may have to start using one-on-one defence coverage, i.e. closer supervision, for even more companies.
According to Hufeld, German banks are also feeling the pain resulting from the low interest rates. He announced that BaFin will be conducting a low-interest environment survey in the near future with the banks remaining under its direct supervision.
President Hufeld also addressed the topic of the Single Supervisory Mechanism (SSM) in his speech. In his view, the SSM uses a much more quantitative or key-numbers based approach in its supervision of the significant institutions of the Euro Zone. This would be nothing to object to, commented Hufeld, as long as everyone can agree that good supervision on a case-by-case basis should also include a qualitative, deliberative and evaluative component. The notion that supervisory decisions can be solely derived from a mechanical, key-numbers based or decision tree process of deduction is unrealistic.
In view of European plans for a Capital Market Union, said Hufeld, the Commission's motives seem to be more economic-political than regulatory in nature. There is of course nothing wrong with this, as long as it doesn't mean the dismantling of financial regulations in the process.
President Hufeld also highlighted in his speech the importance of collective consumer protection, which will be legally anchored as a supervisory objective for all BaFin directorates through the Retail Investors Protection Act (Kleinanlegerschutzgesetz). "With this, the legislator has given a strong signal", said Hufeld. "Collective consumer protection is an important public good."
Following the regulation marathon of the post-crisis years, Hufeld sees a quick and full implementation of the numerous reforms already agreed upon as the primary matter at hand. However, it will be necessary to think through what sort of impacts they will have. Regardless of any simulations, it is only through practical application that the actual effects of regulation can be seen as well as any unintended consequences. It is also necessary to take into consideration the interplay between the various regulatory frameworks.
On 12 May, BaFin also presented its Annual Report 2014. The English version will be published on 16 June.
