Collapse of Wirecard ‘shows greater need for EU regulation’
THE Wirecard scandal has highlighted the need for a common European regulatory regime for financial firms, according to European Economy Commissioner Valdis Dombrovskis.
The collapse of the German electronic payments company with almost €2bn of funds unaccounted for could now spark a revamp of how the European Union carries out financial supervision, Mr Dombrovskis said an interview with the ‘Financial Times’.
The financial technology company’s collapse shows that previous attempts to bolster financial watchdogs in Brussels were a “missed opportunity” and highlight a need for another push, he said.
A previous effort by Mr Dombrovskis to give agencies, including the European Securities and Markets Authority (ESMA), greater clout and more independence from member states was heavily watered down, but he indicated that could be revisited in the wake of the Wirecard scandal.
ESMA said in July that it planned to probe the quality of German financial regulator BaFin’s work, as well as look at the role of FREP, a privatesector body responsible for monitoring company accounts in Germany.
The Wirecard insolvency in June after €1.9bn of cash went missing breached “all three lines of defence” meant to protect EU investors, Mr Dombrovskis said: regulations and corporate governance, auditors, and supervision from public authorities.
The case has raised major question marks over the quality of financial regulation in Germany, where Wirecard is based. The EU is also considering stronger regulations for audit committees of companies’ own boards of directors, he said.
€1.9bn hole in accounts