Opinion of the European Central Bank of 25 August 2017 on amendments to the financial market supervisory regime (CON/2017/35)
Date: 2017-08-25
Institutions: European Central Bank
Subjects: Austria, banking supervision, central bank, credit institution, financial supervision, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 25 August 2017 

on amendments to the financial market supervisory regime 

(CON/2017/35) 

Introduction and legal basis 

On  26  July  2017  the  European  Central  Bank  (ECB)  received  a  request  from  the  Austrian  Ministry  of 

Finance for an opinion on a draft law regarding amendments to the financial market supervisory regime 

(hereinafter the ‘draft law’)

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.  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union, on the third indent of Article 2(1) of Council Decision 98/415/EC2, as 

the  draft  law  relates  to  the  Oesterreichische  Nationalbank  (OeNB),  and  the  ECB’s  tasks  pursuant  to 

Article 127(6) of the Treaty concerning policies relating to the prudential supervision of credit institutions. 

In accordance  with the first sentence of Article 17.5  of the Rules  of Procedure of the European  Central 

Bank, the Governing Council has adopted this opinion. 

1. 

Purpose of the draft law 

1.1.  According  to  its  explanatory  memorandum,  the  draft  law  is  intended  to:  (a)  increase  the 

transparency  of  Austrian  financial  market  supervision;  (b)  improve  the  quality  of  supervision  and 

the functioning of supervisory processes; (c) enhance the legal certainty for supervised firms and 

for other legal entities wanting to operate in the financial services area; and (d) relax organisational 

requirements for smaller credit institutions. 

1.2. 

In  order  to  increase  the  transparency  of  financial  market  supervision  in  Austria,  the  draft  law 

requires  the  Austrian  Financial  Market  Authority  (FMA)  to  conduct  public  tender  procedures 

regarding second level management posts, to establish a mandatory internal audit function within 

the  FMA  and  to  conduct  public  consultation  procedures  before  issuing  regulations,  circulars  and 

minimum standards. The draft law also requires the FMA to publish annual auditing areas on which 

to focus. Furthermore, the draft law increases the OeNB’s cost transparency for performing tasks 

related to the supervision of credit institutions. 

1.3.  The  draft  law  aims  to  increase  the  quality  of  supervision  by:  (a)  strengthening  the  State 

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Bundesgesetz,  mit  dem  das  Bankwesengesetz,  das  Einlagensicherungs-  und  Anlegerentschädigungsgesetz,  das 
Finanzmarktaufsichtsbehördengesetz,  das  Kapitalmarktgesetz  und  das  Versicherungsaufsichtsgesetz  2016 
geändert werden. 

Council  Decision  98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

 
 
 
 
                                                 
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Commissioner’s  Office

;  (b)  improving  the  functioning  of  on-site  audits  and  respective  follow-up 

measures;  (c)  introducing  an  electronic  prospectus  approval  process;  and  (d)  clarifying  the  risk-

based  approach  in  the  area  of  supervision  of  credit  institutions.  Furthermore,  the  draft  law 

introduces the possibility for an accelerated, consensual termination of administrative proceedings. 

According to the draft law, a party may waive the right to appeal before a decision has been issued 

by the FMA in the context of an administrative procedure or an administrative fines procedure. 

1.4. 

In  order  to  improve  legal  certainty  for  supervised  credit  institutions,  the  draft  law  explicitly 

determines  the  legal  framework  for  outsourcing  of  banking  operations.  While  the  outsourcing  of 

banking operations is already permitted to  a certain extent,  the current legal regime  does not set 

out the requirements and limits for such activities. The draft law’s outsourcing provisions are based 

on  outsourcing  provisions  contained  in  various  areas  of  Union  and  national  financial  market 

regulation,  including  the  2009  Law  on  payment  services  (Zahlungsdienstegesetz)),  the  2007  Law 

on  securities  supervision  (Wertpapieraufsichtsgesetz)  and  the  Committee  of  European  Banking 

Supervisor’s Guidelines on Outsourcing

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.  

1.5. 

In  the  future,  natural  and  legal  persons  may  request  from  the  FMA  issuance  of  a  legally  binding 

advance  ruling  regarding  the  supervisory  evaluation  of  circumstances  that  lie  in  the  future  at  the 

time of the application, if there is a particular interest in obtaining such a ruling in view of the major 

regulatory impact. This includes the evaluation whether new business models trigger any licensing 

obligations.  

1.6.  Finally, the draft law aims to provide organisational relief to smaller credit institutions. To this end, 

only significant credit institutions are required to form supervisory board committees. Furthermore, 

it raises the threshold for the obligatory establishment of an in-house internal audit department. The 

rationale for this latter provision is to increase the ability of smaller credit institutions to outsource 

the internal audit function to external experts. 

2. 

Observations 

2.1  The  ECB  welcomes  the  draft  law’s  aim  to  improve  transparency,  quality  and  legal  certainty  of 

banking supervision in Austria. The principles of due process and transparency are also principles 

guiding the work of the ECB within the Single Supervisory Mechanism (SSM), as set out in recital 

58 of Council Regulation (EU) No 1024/2013

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. The ECB recognises that the possibility to issue a 

legally binding advance ruling applies to the FMA without limiting the ECB’s competence regarding 

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The State Commissioner and Deputy State Commissioner have to be invited by the credit institution to the general 
meetings, general assemblies, meetings of the supervisory board, meetings of the audit committees and meetings of 
executive  committees  of  the  supervisory  board.  Their  role  is  to  report  to  the  FMA  on  issues  of  relevance  to 
supervision  in  the  meetings  of  the  supervisory  board  and  its  committees,  to  promptly  point  out  generally  unsound 
circumstances within a credit institution and to raise objections to decisions of the supervisory board or its respective 
committees that breach supervisory law. 
Available on the European Banking Authority’s website at www.eba.europa.eu . 
Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the ECB concerning policies 
relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 

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the  authorisation  of credit institutions as defined in point (1) of Article 4(1) of Regulation (EU) No 

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575/2013 of the European Parliament and of the Council

. 

2.2 

In  order  to  improve  legal  certainty  for  supervised  credit  institutions,  the  ECB  also  welcomes  the 

introduction  of  explicit  rules  regulating  the  outsourcing  of  banking  operations.  In  this  context,  this 

legal regime will also apply to significant credit institutions in Austria which are directly supervised 

by  the  ECB  within  the  SSM  framework.  The  ECB  also  understands  that  these  rules  apply  to 

Austrian  credit  institutions,  and  do  not  have  an  impact  on  their  subsidiaries  in  other  Members 

States. 

2.3  As  regards  the  introduction  of  the  possibility  to  accelerate  the  termination  of  administrative 

procedures  and  administrative  fines  procedures  by  the  FMA,  the  ECB  notes  that  this  possibility 

only applies to the FMA without limiting the ECB’s competence within the SSM framework.  

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 25 August 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  prudential 
requirements  for  credit  institutions  and  investment  firms  and  amending  Regulation  (EU)  No  648/2012  (OJ  L  176, 
27.6.2013, p. 1). 

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