Bafin: Stability of the financial sector and consumer protection have equal importance

For the financial supervisory authority Bafin, the protection of consumers is on an equal footing with ensuring the stability of the financial sector. After all, the crises in the financial sector always affect the general population. And business models that do not adequately take customer interests into account are not sustainable.

The uncertainty in global politics and the resulting pressure on the economy are increasing the risks of the financial sector. They also have a noticeable impact on the general population in Germany: Rising prices and more expensive loans are making themselves felt in people's wallets.

For Bafin President Mark Branson, consumer protection is therefore a very important part of Bafin's work. "The financial market is always about people. And about the security that a stable, functional and integrity financial system offers them," Branson told journalists in Frankfurt am Main today. "The supervision of the stability of the financial sector and consumer protection belong together."

Threat of cyber risks is growing

For Bafin, the current situation includes the growing risk of cyber attacks on the IT infrastructure. Such attacks threaten the stability of companies and their accessibility for consumers. And the number of attacks is increasing. Attackers are increasingly using artificial intelligence for this purpose. "The new AI applications can find and even exploit many vulnerabilities in IT systems. And very quickly," Branson said. Companies must be prepared for the number of potential points of attack to increase. "And they have to close these vulnerabilities much faster." Bafin is therefore strengthening its supervision of cyber risks with additional resources for auditing financial companies.

Private debt in the financial sector and for private individuals

Bafin also sees vulnerabilities in the private debt market. From the point of view of the Bafin President, the lack of transparency and the networking of private debt funds are particularly problematic. With the financing of private debt providers by banks, risks in this market could find their way into the traditional banking sector. Insurers have also increasingly invested in alternative investments such as private debt in recent years. "Alternative investments place special demands on risk management," Branson said. As supervisors, we have to keep an eye on these risks." Bafin therefore very much welcomes the fact that the Financial Stability Board is dealing with the issue in detail. "We need a better understanding of these markets, more transparency and effective international cooperation."

The financial supervisory authority is also cautious about the increasing distribution of private markets products to private clients in Germany, for example in the form of ELTIFs, i.e. European Long-Term Investment Funds. Branson underlined that assets in these funds can hardly be sold quickly without a significant loss in value. In addition to the liquidity risk, the costs are often high and the investments are difficult to assess and often lack transparency. Bafin therefore advises investors not to blindly trust the risk indicators of ELTIFs. Branson: "We know from the example of open-ended real estate funds that these indicators do not always include all relevant risk information. That is why we encourage the European institutions to ensure order here."

Risky financing of residential real estate

Bafin also pays a lot of attention to the German residential real estate market. The share of low-secured residential real estate loans in German new business is comparatively high. In one in seven new loans, the loan volume exceeds the value of the financed residential property. "We take a critical view of this," Branson explained. This is because these loans have an increased potential for losses for credit institutions and could also be problematic for consumers. The Bafin President did not rule out supervisory measures: "Today's risky new loans must not become tomorrow's problem loans."

Successes in the fight against illicit business

Bafin has recently strengthened its supervisory action against unauthorized transactions. In close cooperation with the law enforcement authorities, it has been able to record significant successes in recent months. In this context, Branson referred to measures against organized money launderers and cyber criminals. "Such successes are important to protect the German financial center and consumers," Branson said.

Equally important are the more than 800 warnings about unauthorized offers on fraudulent websites and messenger services that Bafin published in 2025. Branson pointed out the importance of the licensing requirement in this context: "Firstly, this is the only way to ensure fair competition between equally regulated providers. And secondly, we protect consumers in this way."