FMA Facts, Trends and Strategies 2021
With its "Facts, Trends and Strategies 2021", the Austrian Financial Market Authority (FMA) presented the results of its risk analysis for market participants and other stakeholders at the end of the year and, based on this, an outlook on supervisory and audit priorities as well as measures. As expected, a good part of the FMA’s statements relate to the effects of the pandemic. The areas of digitalization, but also climate-friendly developments, such as the influence and evaluation of sustainability criteria and the "green deal", are given special emphasis.
The FMA has been publishing its "Facts, Trends and Strategies" since 2015. In its most recent publication for the year 2021, the FMA identifies the following areas as particularly relevant for the next 5 years:
- resilience and stability;
- new business models;
- collective consumer protection;
- Austria as a "clean" financial center;
- digitization; and
In the previous annual report, the FMA already focused on green finance and the impact of climate targets on the financial sector - at the time without anticipating that the pandemic would already overshadow very concrete efforts in this regard. In its "Facts, Trends and Strategies 2021", the FMA now focuses in particular on disclosure requirements and the integration of sustainability into the existing risk management of financial institutions.
The Taxonomy and Disclosure Regulation is an important factor here. While the Disclosure Regulation contains new transparency obligations for financial market participants and financial advisors across all sectors, the Taxonomy Regulation establishes an EU-wide classification system for sustainable investments. The Disclosure Regulation also extends specific reporting obligations with regard to disclosure requirements. Among other things, information is to be published on how and to what extent the investments underlying a financial product were invested in ecologically sustainable economic activities in accordance with the Taxonomy Regulation.
Through a correspondingly intensified dialog, the awareness of market participants for new risks (and opportunities) is to be sharpened and supported in the application of new regulations as well as the incorporation of sustainability risks into the risk management.
Due to the increasing dependence of financial institutions on IT service providers and the digital form of business processing and the associated risks, the expansion of cyber security and IT risk management (including defense against cyber-attacks) is a key focus for the FMA.
In "Facts, Trends and Strategies 2021", the FMA recalls the key framework in connection with IT risk in the financial sector as follows:
- EBA Guidelines for ICT and Security Risk Management
- EBA Guidelines on Serious Incident Reporting under PSD 2
- EBA Guidelines on Outsourcing
- EIOPA- Guidelines on Outsourcing to Cloud Providers
- FMA Guideline IT Security in Management Companies
- FMA Guidelines on IT Security in Securities Services Companies and Investment Firms
- FMA Guideline on IT Security for Pension Funds
- FMA Guideline IT Security in Insurance and Reinsurance Companies
Due to the observation of increased criminal activity through cyber-attacks on systems of insurance companies, the FMA is focusing on its product for evaluating the control and response capability during and after cyber-attacks ("Cyber Maturity Level Assessment") in order to raise awareness of cyber risks and identify options for action.
Furthermore, the FMA identifies potential for development - especially with a view to maintaining the competitiveness of Austrian financial market participants - in the areas of expanding the possibilities of purely digital business transactions and video-assisted advisory services, among others.
Other Matters of FMA’s Focus
The focus area summarized by the FMA under the topic "Resilience and Stability" deals with the continuation of strategies to maintain and further expand the resilience of financial institutions in crisis. The FMA sees banks in a particularly central role in times of crisis, especially after the expiration of state aid. The challenge of early crisis detection and appropriate control - especially in light of the Commerzialbank case - is also addressed as a key point of the FMA’s focus.
With its focus on new business models, the FMA pays particular attention to new players in the financial market in the areas of artificial intelligence and crypto-assets, as well as to the development of new business models through innovative technologies. The FMA takes a positive attitude towards the promotion of further innovation, but also addresses the need for corresponding legislative action.
The FMA addresses the need to provide information in a timely manner and in a clear, fair, and non-misleading manner by focusing on "collective consumer protection" in conjunction with corresponding market transparency.
The FMA already placed particular emphasis on "Clean Financial Center Austria" in the previous year, and so for 2021 the authority is also emphasizing the importance of compliance with due diligence requirements for monitoring and preventing money laundering and terrorist financing.
"Facts, Trends and Strategies 2021", overall a very well-rounded report that leaves room for an open dialogue to establish market-compliant solution approaches and frameworks, especially in the area of innovative and sustainable topics and market developments.