MEPs called on the European Commission and the EU Council on Wednesday 7 October to learn all the lessons for the future of the European supervisory framework from the accounting scandal involving the German payment service provider ‘Wirecard’ (see EUROPE 12312/15). For members of the European Parliament, the remedy is simple and well-known: set up common supervision at the EU level.
“Mere coordination between national authorities is no longer enough”, said Jonás Fernández (S&D, Spain), arguing for a single supervisory body. The same goes for Luis Garicano (RE, Spain), who believes that the ‘Wirecard’ affair is “a tale of economic nationalism”, and for Sven Giegold (Greens/EFA, Germany), who criticised the inaction of the German BaFin financial supervisory authority.
According to Stéphanie Yon-Courtin (RE, France), reforming the governance of the European Financial Supervisory Authorities (ESAs) to strengthen their independence from national authorities is also part of the solution.
The concept of “too big to fail” should not apply to the financial technology sector (‘FinTech’), said Martin Schirdewan (GUE/NGL, Germany), calling for stricter regulation and supervision of FinTech companies. He also believes that the major global audit and accounting firms, the ‘Big Four’ (KPMG, PwC, EY and Deloitte), must be tackled, by creating a public control structure, for example.
Since the activities in question are criminal, the European Public Prosecutor’s Office should be involved in such cases, said Markus Ferber (EPP, Germany).
Speaking on behalf of both the German EU Council Presidency and its government, Michael Roth, German State Secretary for European Affairs, said he takes the scandal “very seriously” and that he shares MEPs’ concerns.
In his view, the response to the scandal cannot be limited to pointing the finger at national supervisory authorities or to simply giving more powers to European agencies. Other aspects also need to be considered, such as auditing rules and the risk of conflicts of interest, he said.
The German Presidency intends to have EU Council conclusions on Capital Market Union adopted in December (see EUROPE 12575/6). According to Mr Roth, this text will be an opportunity to provide a “coordinated political response” to this scandal.
“It is too early to draw definitive conclusions on the causes of Wirecard’s collapse”, said Commission Executive Vice-President Valdis Dombrovskis, who prefers to wait until the end of the month for the European Securities and Markets Authority’s (ESMA) assessment of the case (see EUROPE 12515/13).
Nevertheless, the Commission has already identified some ways to improve the European framework so that such a scandal does not happen again. With regard to supervision, it considers that the ESAs’ response to early warning signals could be strengthened. ESMA could also be given more powers over national authorities responsible for enforcement activities, Mr Dombrovskis said.
In terms of audit rules, possible changes could include strengthening the role of auditors with respect to the risk of fraud and the effectiveness of internal controls over financial reporting.
The European Commission will soon publish two reports on the functioning of the European audit market, which were planned before the ‘Wirecard’ case, but which should provide some elements of a response, according to Mr Dombrovskis. (Original version in French by Marion Fontana)