After the Wirecard debacle: Olaf Scholz's vision of a new super agency 

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The British shortseller Matthew Earl has had his own personal experience with the highest German financial regulator Bafin.

When he called the authorities' official whistleblower hotline in 2016 to point out something strange at Wirecard, he learned one thing above all: rejection.

The greeting was still friendly.

"But as soon as I mentioned the name Wirecard, the person on the other end of the line said: Sorry, I don't speak English well enough." The next time they hung up immediately.

Then he gave up.

Earl told the Bundestag members of the Wirecard investigative committee last week.

When the man, who described important parts of the fraud model in a report five years ago, was asked to tell the committee what his impression of the German control authorities was, the British verdict was polite but devastating: "Wirecard certainly did not help to improve Germany's already not so good reputation when it comes to money laundering, ”he said.

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The Bafin cannot compete with the US regulator SEC.

Across the Atlantic worked people with practical financial market experience who actively followed up on clues and determined them in full.

The higher effort also costs more money, according to Earl, but thanks to the success of the investigation and the associated high fines, this comes back in.

Demanding job profile of the new

Bafin on the way to the SEC - that is a long way to go, but Federal Finance Minister Olaf Scholz (SPD) wants to bring the financial supervisory authority under him there.

"The SEC has broader powers over financial companies and acts with great self-confidence," he enthused months ago.

Now he specified his plans for a new supervision "with a bite", as he said.

With the help of the management consultancy Roland Berger, his people worked out a corresponding paper.

There is no shortage of ambitious goals for the reorganization of the Bafin.

"We want to be able to compete with all supervisory authorities in the world," said Scholz.

The “best standard” should in future be found in Germany.

Stricter control of the financial markets is good for Germany as a financial location as a whole and also good for investors.

Scholz wants to “quickly introduce” the new management staff, as he said.

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The successor to the previous President Felix Hufeld, whose departure was announced the previous week, is being sought worldwide, said Scholz.

From this one can conclude that there will be no purely German solution, especially no internal one.

The new president must embody everything that the German financial supervisory authority should stand for.

International expertise and practical experience in the capital markets are an essential part of his job profile.

And he should be more powerful than his predecessor Felix Hufeld.

A new task force and focus oversight that oversees companies with complex structures should be controlled directly by the president.

The authority should be authorized to question market participants in cases of fraud, to search buildings and to confiscate files - similar to a public prosecutor's office.

More and more qualified supervisors should work for the authority.

We are looking for auditors and people who have experience in investigating white-collar crime.

When it comes to salary, you want to be more generous than usual.

"Strong supervision is in the interests of the German financial center"

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One of the cornerstones of the reform paper is that the supervisors should exchange more information with market participants, take indications of fraud or market abuse seriously and pursue them proactively.

The declaration often made in the Wirecard affair that one was not responsible should no longer apply.

The pressure on the authority is high to make use of these new rights.

The banking industry welcomed the reform proposals.

"The measures to reorganize BaFin presented today by Federal Finance Minister Olaf Scholz are a step in the right direction," said the Association of Banks.

This applies in particular to the regulatory measures for better balance sheet control, a better exchange of information between supervisors and the improvement of corporate governance.

"A strong, efficient supervisory authority is in the best interests of the German financial center," it said.

It is right to create leaner structures and to strengthen the position of the president in the Bafin.

Criticism, however, came from non-governmental organizations, consumer advocates and the opposition.

Britta Langenberg from the Finanzwende citizens' movement has doubts as to whether the authority can implement the necessary cultural change so quickly: “Olaf Scholz cannot simply reform the supervisory authority with more bite.

This requires a cultural change, a kind of re-parking in the head. ”Too much remains strangely vague, for example how consumer protection should be strengthened.

This is also what Klaus Müller, the board member of the Federal Association of Consumer Organizations, is about.

“A BaFin reform is necessary, but the plans presented fall short,” he said.

The fact that financial markets do not work for many consumers is primarily due to inadequate consumer protection laws.

Building on this, supervision must be strengthened.

For a real restart it takes more than catchy keywords

The criticism from the deputy chairman of the left-wing parliamentary group and chairman of the Wirecard investigation committee, Fabio De Masi, was also harsh.

He accused Scholz of baking small rolls.

"The minister wants to react to the biggest financial scandal in the Federal Republic with a little PowerPoint from Roland Berger."

It makes sense if the Bafin gets more of its own people with auditor exams.

“But if you want to play in a league with the Big Four, you need a real elite forensic team with top salaries, the use of the latest technology such as artificial intelligence and your own training program.” But this costs money.

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The Green finance politician Danyal Bayaz praised the proposals of Olaf Scholz in principle.

“They seem to be going in the right direction, but at the same time they are a bit thin.” For a real reorganization of the financial supervisory authority, however, it takes more than bold keywords on two pages.

In addition, the Bafin must become more independent from the Ministry of Finance and coordinate more effectively across Europe.

He demanded that the Bundestag be "appropriately involved" in the search for a new Bafin head.

For example, candidates should answer questions from the Finance Committee before they are appointed.

"In addition to professional competence and experience, what is needed above all is a person who can initiate a cultural change at Bafin," said the Green politician.

Bafin has 2,700 employees.

Experts assume that the authority will have to hire a few dozen employees in order to be able to fulfill the new tasks.

The financial service providers themselves have to pay the costs through an allocation.