The failure of fintech Wirecard has raised concerns at the EU, where MEPs are examining ways to reform audit rules and improve EU supervision
MEPs on the Economic and Monetary Affairs and Legal Affairs committees exchanged views with experts on lessons learned from the Wirecard collapse and shortcomings in supervision.
Committee members focused their questions on changes that need to be made to the supervisory and regulatory systems to address innovation and technological changes in the financial sector.
They stressed that audit rules have to be revised in order to break the monopoly created by the four major audit firms to address conflicts of interest, shorten the rotation period for an audit company engagement and introduce co-auditing.
Numerous members called for EU supervision to be enforced more effectively and better implementation of the existing laws, in particular those on anti-money laundering and banking supervision.
Discussions also focused on changing the rules so smaller shareholders are able to initiate joint legal action when a company collapses and how companies such as audit firms can be held directly liable for gross negligence.
MEPs stressed that the whistle-blower directive is being implemented at national level, but they wanted to know whether it should be advanced, and whether the level of protection provided for in the directive goes far enough.
Matthias Hauer, member of the Deutsche Bundestag (MdB) and member of the Committee of Inquiry on Wirecard focused on steps to be taken in order to make auditing companies more competitive, the need for increased liability for gross negligence, a new organisational structure for financial supervisors with more protection for consumers and a stronger role for whistleblowers.
Wirecard AG is a German fintech company that provided electronic payments processing services and operated internationally. Last June, Wirecard filed an application to open insolvency proceedings. The insolvency followed the revelation of a multiyear accounting fraud dating back to 2015 following allegations by a whistleblower in 2019. In June 2020, the company announced that EUR 1.9bn, supposedly held by an escrow account at Singapore’s OCBC Bank, did not exist and the fraud was exposed.