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Who are the Federal Financial Supervisory Authority?

 

The Federal Financial Supervisory Authority (BaFin) is the major regulator of the German financial services sector. With offices in Frankfurt and Bonn, BaFin is responsible – under the supervision of the Federal Ministry of Finance – for regulating the behaviour of some 2,700 banks, 800 financial services providers and more than 300 investment firms in the country.

 

Established in 2002, the main goal of BaFin is to enact the statutes of the Financial Services and Integration Act, which is the single piece of legislation that covers all of Germany’s financial markets. BaFin was created as the result of a merger between three distinct bodies: the Federal Banking Supervisory Office, the Federal Supervisory Office for Securities Trading, and the Federal Insurance Supervisory Office.

 

In 2003, BaFin was granted additional regulatory powers in monitoring financial institutions with the aim of protecting customer integrity, though in 2014 some of these responsibilities were passed back to the remit of the European Central Bank.

Regulatory areas and powers

 

The main focus of BaFin is to maintain the integrity and stability of the German financial system, with specific reference to the regulation and supervision of banks, trading brokers, exchanges and other institutions.

 

BaFin has the responsibility to protect the needs of customers and investors by maintaining confidence in the quality of operators within the financial market, and also the power to take action against any service providers that act in a manner that is contrary to this stated ambition.

 

With specific reference to trading forex and other commodities, BaFin works in accordance with the Securities Trading Act, which explicitly outlines measures for protecting against market abuses and price manipulation.

Its enforcement powers include, but are not limited to, the ability to issue subpoenas (which prevent brokers from operating), suspensions and permanent bans, while reporting cases of particular note to law enforcement authorities. However, it is rare for BaFin to utilise the full extent of its powers.

 

However, it has issued temporary bans in certain cases, notably in 2008 when the short selling of 11 key German stocks was banned during the global financial crisis, and in 2010 when the short selling of credit swaps was halted due to the European sovereign debt crisis.

 

How to check if a broker is regulated by the Federal Financial Supervisory Authority

 

It is possible to find out whether or not a financial services provider or broker is regulated by BaFin by performing a full entity search using its database, which can be found here: https://www.bafin.de/EN/PublikationenDaten/Datenbanken/Datenbanken_node_en.html.

 

This is a register of all of the companies that hold the necessary authorisation to operate in the German market, as well as those that have passed the EU/EEA procedures and/or have a representative office in Germany.

 

There are other useful lists on that webpage, where it is possible to search for investment firms and brokers that operate specifically in a chosen area.

 

Making a complaint

 

To make a complaint about a financial services provider, BaFin recommends first trying to resolve it directly with the operator – more information on that can be found here: https://www.bafin.de/EN/Verbraucher/BeschwerdenAnsprechpartner/beschwerdenansprechpartner_node_en.html.

 

If the complaint is rejected by an operator that falls under the remit of BaFin, it can help to conclude whether or not the firm is operating in a manner that needs to be investigated further.

 

To help BaFin maintain the highest standards of practice in the financial services market, it is possible to sign up to become a whistleblower at https://www.bafin.de/EN/Aufsicht/Uebergreifend/Hinweisgeberstelle/hinweisgeberstelle_node_en.html

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