Dr Pötzsch, why did BaFin take such a deep dive into certificates?

The growth in sales of certificates is tremendously important for consumer protection. That is why we took a very close look at various aspects in two comprehensive market studies. We suspected that savings banks and other banks had launched a sort of sales offensive after the low interest rate phase – and had stepped up their advice to customers to invest in interest rate and express certificates.

Independently of this, we also looked at turbo certificates – also known as turbo warrants or turbos – as a trading product. They are designed for what we call “self-deciders”. Banks or savings banks do not provide any advice on products like this, so there is a considerable risk of loss with turbo certificates. And we suspected that retail investors are not always aware of these risks.

We took a long, hard look at both assumptions, openly, fairly, but also very persistently. I can summarise the results by saying there is a lot of light, but also a lot of shadow.

Let us look first at interest rate and express certificates. How was your investigation conducted and what were your findings?

From May 2024 to February 2025, we conducted a five-stage analysis in which we directly surveyed credit institutions, product manufacturers and consumers. There was also a mystery shopping campaign.

We certainly identified shortcomings in the individual investigations. However, the overall result is encouraging: there are no systematic and serious irregularities in the sale of investment certificates. Neither is there any evidence that institutions have pressured their clients into buying certificates like this. And it is only fair to point this out publicly, just as we criticise any mistakes we identify.

Where did irregularities occur?

Dr Pötzsch: We noticed that some product manufacturers do not comply with their product governance obligations, meaning that they do not pay sufficient attention to a responsible manufacturing and distribution process. Among other things, they did not fully address market scenarios such as falling or rising prices. This is a cause for concern – precisely because the product structures involved are sometimes highly complex.

We also found that banks and saving banks did not disclose margins consistently in the cost information. This puts clients at a disadvantage because it makes it more difficult for them to compare products.

For the first time, you also directly surveyed consumers who had previously purchased certain financial products. You asked them about their experiences with the advice and the product itself. You discovered that around 20 per cent of investors who bought express certificates did not understand how the product works.

Dr Pötzsch: That’s right. Express certificates have complex structures and many clients do not know how they work. But it’s vital to know this. We recommend that they always pay close attention to the redemption conditions for express certificates and keep an eye on the underlying instrument, such as the underlying share or bond. If they don’t do this, it can be difficult for them to judge how much risk is involved in products like this.

But there were also irregularities in the advice provided for simpler certificates.

Dr Pötzsch: We conducted two consumer surveys on investment advice, with a total of almost 2,000 participants, around 320 of whom received advice on certificates from financial institutions. Many of them stated that they had problems following the explanations given by the bank employees. At the same time, we observed that clients trust them a lot. However, advisers must be aware of this stable, trust-based relationship and live up to it through their work. Incidentally, buyers of express certificates were also satisfied with both the advice and the recommended product.

Buyers of turbo certificates were probably not so satisfied. They lost a lot of money.

Dr Pötzsch: That’s right – and we are very troubled by it. In the almost five-year study period, more than half a million people in Germany bought turbo certificates, meaning products that speculate on a specific underlying instrument such as a share, currency or commodity, and are equipped with a knock-out threshold and leverage that amplifies price fluctuations. Around 75 per cent of buyers lost their money in the process – that’s a total of more than €3.4 billion over the five years.

A provocative question: aren't the “self-deciders” you mentioned earlier responsible for their own misfortune?

Dr Pötzsch: Even though some buyers of turbo certificates are experienced investors, manufacturers and distributors must clearly and transparently communicate the risks of such products. And the study shows that there is still room for improvement. On the other hand, investors also have a personal responsibility: they should read the obligatory information documents carefully.

How is BaFin acting on the insights gained from the two market studies?

Dr Pötzsch: In cases where we identified shortcomings in investment advice provided for certificates, the institutions concerned must remedy them, and we are requesting them to do this. We will also be discussing our findings with the banking industry associations. Additionally, the insights we have gained will be incorporated into the information we provide to consumers. Our aim is to help consumers to act independently in the financial markets and empower them to make their own decisions.

We are still analysing the details of our turbo certificates study. We will publish the results of the study. And we are considering whether we should take further supervisory measures.