BaFin - Federal Financial Supervisory Authority(BaFin)

Who is BaFin?

BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht – German Federal Financial Supervisory Authority) is Germany’s independent financial supervisory authority. BaFin was established in 2002 through the merger of three separate supervisory bodies (banking supervision, insurance supervision, and securities trading supervision).

Executive Structure:

BaFin is governed by an Executive Board, headed by a President.

BaFin is an independent federal institution but is subject to the legal and technical oversight of the German Federal Ministry of Finance.

What does BaFin regulate?

Licensing: BaFin licenses new financial institutions and monitors compliance with licensing conditions. License types include banking licenses, financial services licenses, insurance licenses, payment licenses, and e-money licenses.

Ongoing Supervision: Regularly monitors the business activities of licensed institutions to ensure they comply with regulations, maintain sufficient capital, manage risks effectively, and protect customer assets. BaFin applies a risk-based supervisory approach.

Rule-making and Enforcement: Develops and enforces a comprehensive legal framework for the German financial services sector, based on national law and European Union (EU) regulations.

Prevention of Market Manipulation and Insider Trading: Investigates and penalizes market abuse practices such as securities price manipulation and insider trading.

Consumer Protection: Handles consumer complaints, provides information and warnings about financial risks or unlicensed providers.

How to resolve disputes with brokers/financial service providers regulated by BaFin?

BaFin does not directly resolve individual disputes regarding financial compensation. Instead, BaFin focuses on its general supervisory role to ensure regulatory compliance. However, there are dispute resolution channels that consumers can use:

Step 1: Directly contact the Financial Institution (FI). This is always the first and most important step. All BaFin-licensed financial institutions must have an internal process for handling customer complaints. You should contact the FI’s customer service or complaints department to present the issue in detail and seek a solution.

Step 2: Escalate the complaint to an Ombudsman or Alternative Dispute Resolution (ADR) body. If a satisfactory solution is not achieved directly with the FI, you can turn to independent ombudsman offices or ADR bodies. Many banking, insurance, or financial services associations in Germany have their own conciliation bodies. These ombudsman offices act as intermediaries, providing free or low-cost dispute resolution processes for consumers.

Step 3: Report violations to BaFin (if necessary). BaFin does not have the authority to resolve individual complaints or provide direct compensation. However, if you believe that the financial institution has seriously violated BaFin’s regulations (e.g., lack of transparency, insufficient capital, signs of fraud, or anti-money laundering violations), you can and should report this issue to BaFin.

Your information will assist BaFin in its supervision, investigation, and, if necessary, in applying sanctions or policy reforms to that financial institution.

You can find out how to submit a report to BaFin under the “Consumer Protection” or “Contact” sections of their official website.

Official BaFin homepage: https://www.bafin.de/

BaFin’s consumer protection and contact page: Usually has a “Complaints/Beschwerden” or “Contact/Kontakt” section for submitting inquiries or reporting violations.

BaFin contact number (Consumer Hotline): +49 (0) 228 4108 0 (for general advice or inquiries about the complaints process).