Hufeld had been head of insurance supervision since January 2013 and will also continue to perform this function for the time being on a temporary basis. He is also chairman of the Executive Committee of the International Association of Insurance Supervisors and a member of the Management Board and Board of Supervisors of the European Insurance and Occupational Pensions Authority.

Before he joined BaFin, Hufeld’s previous jobs included working for many years as an international director at Marsh, an international insurance broker and risk consultancy firm. As a result of his work as head of global group development at Dresdner Bank AG and of his many years’ experience as a corporate consultant, mainly for banks and financial service providers, at the Boston Consulting Group, Hufeld also brings a great deal of knowledge of the banking sector. He began his professional career as a lawyer. Hufeld studied law at Mainz and Freiburg Universities. He also holds a Masters Degree in Public Administration (MPA) from Harvard University.

In this interview with BaFinJournal the new President explains what goals he has set himself, what topics he will be devoting particular attention to and what attracts him about his new job.

Mr Hufeld, congratulations on your appointment. What does it feel like, being the new President of BaFin?

I am taking on this great responsibility with all the respect it deserves. Exercising effective supervision and developing appropriate regulation of the financial industry both nationally and increasingly on a European and international basis is a task of paramount importance. I am very much looking forward to joining my colleagues in addressing these issues.

What in particular is it about the new job that attracts you?

Firstly, the huge variety of issues that we as an integrated financial services supervisor are faced with on a daily basis. Secondly, the significance of the task – what we do here is really important. And thirdly, the people involved. Both nationally and internationally we have dealings with a great many contacts – both from the institutions and associations that we supervise and from other agencies or political authorities. They all represent differing interests and embody different political and cultural experiences. Discussing contentious issues with them and generally arriving at reasonable solutions in the end is a great, exciting and highly educational adventure.

What goals have you set yourself as President?

Just let me mention three main points here as well. Firstly, it is important to collaborate effectively in financial regulation. It is a key function of BaFin to become involved early and effectively in matters as they develop, especially internationally – be it at a European or a global level. But our core business – and this is my second point – is and remains supervision itself. It must be and must remain effective and strong, and that includes from a national perspective as well. And thirdly, we must continue to work on remaining a very efficient authority that is capable of facing up to the challenges of the future.

You have up to now been head of insurance supervision. Will your focus remain on issues concerning the insurance industry?

It is in the nature of my new post as President that all topics that BaFin deals with fall within my jurisdiction. To that extent I will certainly not lose contact with insurance supervision matters, especially since I will for the time being continue to perform this function on a temporary basis, until a successor is found. But after then at the latest these topics obviously cannot and need not be the focus of my attention as much as they have been up to now. But the experience I have gained from these first, very intensive two years as a supervisor will definitely stand me in good stead in my new position.

Which subjects will you be devoting your attention to first? Which do you think is the most pressing?

There are a number of pressing tasks that I would like to place a certain emphasis on. In banking supervision the key issue that we will have devote particular efforts to is undoubtedly the setting-up and development of Europe’s Single Supervisory Mechanism (SSM). It will also be essential to keep a very watchful eye on developments relating to Greece. The most pressing task in insurance supervision at present is the many, very complex application procedures that it is having to cope with in preparation for the new European supervisory regime, Solvency II. Here we have now definitely entered the home straight – in ten months’ time we will finally cross the finishing line. And securities supervision is also faced with great challenges: it is having to tackle the consequences of two major pieces of European financial market legislation, MiFID II and MiFIR. On the one hand issues of an organisational nature, such as the establishment of new reporting procedures, will have to be dealt with; but on the other hand it also means having to establish fundamentally new supervisory standards for the whole market. There are also major challenges affecting BaFin as a whole.

What are these?

Off the top of my head I can think of four overarching topics that I should like to highlight: the character of BaFin as an integrated financial supervisor; consumer protection; the future role of BaFin in Europe; and all the complex issues involving IT, the internet and new media. These topics will assuredly keep us especially busy over the next few years.

Let us look at these points in more detail. BaFin has indeed been an integrated financial supervisor since it was established. Where do you see a need for improvement?

BaFin is an integrated financial supervisory authority, yes, but what does that actually mean in practice? So far this has still been too abstract and difficult to put into words, so that integrated financial supervision has almost become a shibboleth. It is not a question of lumping together good and pragmatic supervisory practices from each of the separate industries into a global melting-pot for integrated financial supervision. Rather, it is a question of demonstrating the specific advantages accurately and making them come alive – for example, the advantages that arise through the exchange of know-how and through the potential for synergy gains but also the variety of development paths for members of staff. I am firmly convinced of the advantages of integrated financial supervision, the strengths of which are becoming clear, and that is especially true in an international context, too . For me, consumer protection is an excellent example: many consumer protection issues concern a number of different industries at the same time or throw up difficult questions of balancing the interests of different groups of consumers. Sometimes consumer protection issues also need to be weighed against issues of capital adequacy or financial stability. No-one is better placed to assess and resolve such issues comprehensively and competently and to translate them into effective measures than an integrated financial supervisor.

Why is consumer protection one of the most important overarching subjects that BaFin has to deal with?

The revised Act Establishing the Federal Financial Supervisory Authority (Finanzdienstleistungsaufsichtsgesetz – FinDAG), which is to be amended to bring it into line with the proposed Retail Investors Protection Act (Kleinanlegerschutzgesetz), will provide us with overarching powers of intervention. They will allow BaFin to integrate civil-law standards of protection or court rulings more closely into its supervisory activity. For some areas of supervision, that is a quite major paradigm change, which we want to exploit to provide consumers with even better protection overall. To that end, we must develop an effective range of tools for the whole of BaFin.

As the third major, overarching challenge you mentioned the role of BaFin in Europe. This is a topic that is bound to affect banking supervision in particular.

The unification and harmonisation of European financial supervision is quite obviously an enormously important topic for banking supervision, but by no means for banking supervision alone. Developments in Europe affect all of BaFin’s activities, albeit to varying degrees. We shall have to learn to supplement the authority of BaFin that it has traditionally exercised through its power to issue direct instructions with authority based increasingly on exercising influence not only in a highly professional manner but also in a tactically astute way. The objective remains the same: we want to preserve and strengthen the pertinence of BaFin – but the means will have to change. We’re not talking here of a downgrading of emphasis but of a shift in emphasis. BaFin must be appropriately involved when European authorities take regulatory or supervisory measures affecting German institutions. We will also still have to effectively perform the leading role that we play as the national supervisory authority of a very important country in Europe. What we must do is organise European commonality effectively, without ignoring national necessities and interests. That is a clear mission, on which we will have to work very hard and purposefully at various levels.

You also mentioned IT, the internet and new media. What aspects do you want to concentrate on here?

For the institutions that we supervise the risks associated with the use of IT systems and the internet are a threat that must be taken seriously. For that reason the IT Security Act that the Federal government has brought in describes the financial industry as a whole as a “critical infrastructure”. In the recent past we have had to take due note of very serious threat situations, some of them here in Germany, even more in other countries, that may call into question the proper functioning of institutions but also potentially of whole sectors of the financial industry. That is something we must tackle more vigorously.

Are there actually any things that you want to do fundamentally differently from your predecessor?

Yes, quite a few things will change around here: since Dr. König will take her pictures with her, I am being forced to redesign the office. That will lead to a radical change in the artistic direction of BaFin. But seriously: for me it is a quite special pleasure and honour to be allowed to succeed Dr. König in this role. She did a splendid job in her three-year term of office as President. We always worked very well and very closely together. I would like to take this opportunity to thank her warmly once again and to wish her all the best in her new post.