Germany’s financial regulator, BaFin, imposed two
administrative fines totaling €560,000 on flatexDEGIRO Bank AG for breaches of
the German Securities Trading Act.
According to BaFin, at the beginning of 2022, flatexDEGIRO
Bank advertised free investment services on two of its websites without clearly
stating that a regular processing fee would apply. The company “adjusted its
practices” later that year to “align with legal requirements.”
FlatexDEGIRO, the retail arm of flatexDEGIRO Bank AG, serves
around 3 million accounts and processes over 60 million securities
transactions annually.
Marketing Must Be Fair and Clear
BaFin emphasized that information published by investment
services providers must be “fair and clear.” This requirement applies
especially to marketing communications, including company websites, and is
intended to protect customers from misleading statements.
Balanced Disclosure Required by Law
Under the WpHG, investment services providers must present
both the benefits and risks of services, such as brokerage or financial
products, in a balanced and transparent manner.
Companies are required to
highlight relevant risks alongside any potential advantages. These obligations
are further specified in EU regulations and in MiFID II guidance.
Company Response on Fine
Finance Magnates reached out to flatexDEGIRO for comment.
The company said: “We had anticipated a fine of this amount and had already
made the corresponding provisions.”
“We also actively addressed this in the
publicly available analyst call for the third quarter of 2025. The fine
therefore has no material impact on our expected consolidated net income of
€150–160 million in 2025.”
Regulatory Breach Details
BaFin noted that flatexDEGIRO Bank’s advertising of free
services without explicitly mentioning the processing fee violated these
provisions. The regulator can impose fines up to €5 million or 10% of a
company’s total revenue for such breaches.
Previous Compliance Issues
The bank confirmed that it took corrective measures in 2022
to ensure compliance with the legal requirements. In 2023, BaFin
imposed a €1.05 million fine on flatexDEGIRO Bank AG for breaches of
banking supervisory rules.
The regulator also required the company to address
serious lapses in internal controls, including supervisory reporting and
anti-money laundering measures, and appointed a special representative to
monitor implementation.
This article was written by Tareq Sikder at www.financemagnates.com.
Source link
