As the Wirecard scandal continues to cause shock waves across the FinTech industry, Germany’s lawmakers are calling for a total revamp of the regulatory oversight system.
The Wirecard scandal first came to light in mid-June after auditor Ernst & Young (EY) refused to sign off on its financial statement for 2019, following the discovery of a €1.9bn ($2.1bn) hole in its finances. The German payment processing giant subsequently admitted that the money probably never existed in the first place.
In the weeks that have followed, authorities have launched several criminal investigation against Wirecard’s top brass, the company has filed for insolvency and the FinTech companies relying on the business’ solutions have rushed to find a replacement for its services.
The scandal has also put the spotlight on the German regulator BaFin and the country’s prosecutors for not discovering the financial inconsistencies and acting on them earlier.
Now, finance minister Olaf Scholz has said that lawmakers must move quickly to overhaul the regulatory oversight of the financial markets. He had identified that one of the reasons Wirecard slipped through the cracks was that different authorities and auditors have to deal with complex coordination problems, which led to gaps in the supervision of Wirecard.
On Sunday, Scholz announced that he plans to give BaFin more power to look into businesses’ finance reports, regardless of whether or not they have a banking section, he had told the paper Frankfurter Allgemeine Sonntagszeitung.
Scholz also said that he would be open to give BaFin more funding and staff to undertake special and wider audits.
“No-one should assume it is enough to hold your breath and hope for the best,” he said, according to the New York Times. “We will have to clarify in each area what went wrong.”
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