The low level of interest rates was not just causing problems for those typically affected, such as life insurers and Bausparkassen, but was making its presence felt in the whole banking sector, said Hufeld. Institutions which primarily based their business models on interest income and maturity transformation were having increasing difficulty generating sufficient income in the long term. The question might sometime arise, according to Hufeld, of how to create a business model in a world in which the traditional interest income might only play a minor role.

Raimund Röseler, Chief Executive Director of Banking Supervision, pointed out that institutions with a broad customer base in the deposit and credit business were particularly affected by the low interest rates. "50 percent and rising of all credit institutions now have higher interest rate risks," explained Röseler. BaFin would this year begin to determine a capital add-on to underpin the interest rate risks as part of the Supervisory Review and Evaluation Process (SREP) for all the about 1,600 institutions directly supervised by BaFin, he said.

Frank Grund, Chief Executive Director of Insurance Supervision, acknowledged that the low level of interest rates was weighing on life insurers, but said that BaFin could not currently confirm that undertakings, even smaller ones, were increasingly turning to risky assets to be able to fulfil their guarantee commitments. However, Pensionskassen (occupational pension schemes) were suffering even more than life insurers from the low interest rates. In individual cases, they might soon be unable to provide their benefits in full using their own resources. "We're talking to them about what to do," said Grund. However, those entitled to a pension would not be left without protective mechanisms, he said, and these may be subjected to a practical test in the near future.

"We want an appropriate level of protection for all consumers, no matter what financial sector they are active in," said Elisabeth Roegele, Chief Executive Director of Securities Supervision/Asset Management, explaining the goal of BaFin's new task, collective consumer protection. To achieve this, BaFin was, among other things, approaching providers with targeted surveys on issues like credit-linked notes, she said. In another survey, BaFin wanted to find out whether banks and savings banks were systematically disadvantaging customers by unreasonably delaying the passing along of interest rate changes on consumer loans to them.

Béatrice Freiwald, Chief Executive Director of Internal Administration and Legal Affairs, discussed the role of sanctions in the course of supervisory activities. She noted that BaFin was often viewed as very lenient in this area, with the argument generally being that supervisors in other countries imposed tougher sanctions and did so more frequently. Freiwald mentioned two reasons why such comparisons were not really appropriate: "The word 'sanction' does not always mean the same thing in the supervisory law of other countries as it does in ours, and the prerequisites for sanctions to be imposed are often different as well".

Digitalisation was also putting real pressure to change on the financial sector, in the view of the BaFin President. Fintech companies were currently providing competition particularly for banks at the moment, but who would get what market share would not be decided either by politicians or by supervisors: the success or failure of a business model was decided by the market, said Hufeld. Nevertheless, there were good reasons why this market was regulated. "That's where we come in," said Hufeld, adding that the motto must be "same business, same risk, same rules". BaFin could be expected to communicate appropriately, he said, with "appropriately" meaning comprehensibly, quickly and, as far as possible, electronically.

Hufeld called for the reasons behind the tightening-up of regulation not to be forgotten, just eight years after the financial crisis. Otherwise there was a risk of another regulatory "pork cycle" consisting of crisis, regulation, deregulation, and another crisis, which can be in no one's interest, he said. He also highlighted the importance of proportionality and the assessment of adverse effects and interactions now and in the years to come.

According to Hufeld, one topic was emerging in the public debate which was testing the limits of traditional financial supervision: behaviours which did not just raise questions of legality but of legitimacy as well. What was certain was that it could not be the job of a state supervisory authority to clarify unanswered legal questions in the course of its administrative duties, ahead of the legislature or case law from the highest, or least a higher, court. "An authority does not make the law, it applies existing law," explained Hufeld.

BaFin also presented its 2015 annual report on 10 May, which is now available in German. An English translation will be published on 29 June.