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The bomb is ticking at the ASF!

EMILIA OLESCU (translated by Cosmin Ghidoveanu)
English Section /

The bomb is ticking at the ASF!

The scandal surrounding the Financial Oversight Authority (ASF) has escalated to a pitch, lately. The protests in the insurance sector, as well as the chaos in the stock market come amid the lack of supervision, those involved say.

Consumers of financial services, as well as trade unionists and employers, carriers, insurance brokers, damage assessors and liquidators, have all revolted against the situation, pointing the finger at ASF and especially at the way the institution is led.

At the ASF there is total chaos, qualified people, capable of regulating the market and protecting consumers are nowhere to be found, market entities are saying. In their opinion, the lack of a chairman is acutely felt at the ASF, and serious problems are constantly piling up, especially in the insurance and stock market sectors.

The quoted sources are worried, among other things, that the major insurers investors will withdraw from Romania, which would mean that the ASF is sitting on a powder keg, which will cause massive damage when it goes off, and not just in the insurance sector.

Chaos in the insurance and reinsurance market is growing since Leonardo Badea left as chairman of the ASF, players in the sector say. According to them, in charge of the ASF are not appointed people to regulate the market, but to protect the insurers, not at all the consumers who pay their mandatory insurance policies. In the absence of a leader, nobody is taking responsibility, the quoted sources say.

In this context, several organizations that are part of the Advisory Group for the Protection of Consumers of non-banking financial services, ancillary to the ASF, are requesting, in an open letter sent yesterday to the Parliament, the "reset" of the ASF, starting with its management.

The signatory organizations, which represent both the business sector and trade unions, consumers and self-employed professionals whose activity falls within the regulatory area of the ASF, are of the opinion that the institution is going through a serious crisis of authority and leadership, which must be overcome quickly, in order to generate a significant improvement in all the three markets regulated and supervised by the ASF (insurance market, capital market and private pension market, and for consumer confidence among all those involved (policyholders, retail investors, participants and beneficiaries of private pensions) to return to a level that supports expansion in the three markets.

The organizations which signed the petition support PSD senator Daniel Cătălin Zamfir, known for promoting several laws pertaining to the banking sector, as chairman of the ASF. The quoted sources think that only Daniel Zamfir "has a profile which, on one hand, is similar to that of former ASF president, Leonardo Badea, given his experience in both Chambers of the Parliament, where he has held supporting positions in the specialized commissions, and on the other hand he has demonstrated his ability to have a dialog with and to take under consideration the interests and arguments of all the concerned parties (the business sector, unions, consumer associations, independent professionals etc.), which creates the premises for a successful term at the helm of the ASF".

The signatory organizations endorse PSD senator Daniel Cătălin Zamfir, known for promoting several laws in the banking field for the ASF leadership. The quoted sources consider that only Daniel Zamfir "has a profile that, on the one hand, is similar to that of the former ASF president, Leonardo Badea, in terms of parliamentary experience in both Houses of Parliament, where he held leadership positions in specialized committees, and on the other hand has proved his ability to discuss with everybody and take into account the interests and arguments of all stakeholders (business environment, trade unions, consumer associations, independent professionals, etc.), which creates all the prerequisites for a successful mandate to the ASF leadership".

The social-democrat senator has submitted his candidacy for the position of ASF chairman in February this year, after he was proposed by the PSD for the position.

Back then, Daniel Zamfir gave us the following statement: "My colleagues in the party have proposed to me some time ago to run for chairman of the ASF, and I am honored by that. We will see what gets decided in the Executive Committee".

On Friday, Mr. Zamfir told us that the decision will be made in the joint session of the parliamentary chambers, for which no date has been set yet. He said that talks on the subject have been held before in the Executive Committee of the Party, at the end of February, as he was the only candidate proposed by the PSD, but due to the measures passed as a result of the Covid-19 pandemic, the two parliamentary chambers have not held further meetings, and the decision on who the next head of the ASF will be has yet to be made.

"In the coming weeks, the Parliament will decide who the head of the ASF will be", the senator said.

Each political party can come with its own candidates. The list of ASF chairman candidates can also include independent candidates, Daniel Zamfir further said, and stressed that the proposal of the PNL is Nicu Marcu, vice-president of the Court of Auditors. "Some social-democrats would want Ionuţ Mişa, former Finance minister as head of the ASF", the MP further told us.

"Parliament will decide, in the coming weeks, who will be the head of the ASF," the senator told us.

Each party can come with its own candidates and the list thereof may also include independent candidates, Daniel Zamfir also explained. He said that the PNL nominee is Nicu Marcu, vice-president of the Court of Auditors. "Some Social Democrats would like Ionuţ Mişa, the former Minister of Finance, to helm the Financial Supervision Authority," Zamfir further said.

The ASF chairman seat was left empty after the former head of the ASF Leonardo Badea was appointed as deputy governor of the NBR, where he started working on November 11, 2019.

Since then, various names have begun appearing in the market to occupy that position, including former Finance Minister Eugen Teodorovici.

Since the departure of Leonardo Badea to the NBR, the interim leadership of the ASF is provided by Doina Dascălu, first vice-president of the institution.

The ASF is currently sitting on a gunpowder keg, PSD senator Daniel Cătălin Zamfir says.

In the context of the recent scandals, both in the insurance sector and in the capital market, the parliamentarian told us: "It is crazy what is happening over there. This institution clearly lacks leadership. The decisions of the ASF are mostly to the detriment of consumers than to their advantage, as they normally should be. The decisions and attitude of the ASF have clearly taken the side of insurance companies.

In the stock market the chaos is unimaginable, as it is in the insurance segment, there are scandals in every sector it oversees. It is unacceptable for an institution to be rocked by so many scandals, and for it to reach the point where it is not doing its job in the sectors it is watching. This institution essentially doesn't exist".

"The ASF - involved in heavily publicized harsh exchanges and in conflicts between business entities", the quoted letter states

Lately, especially as the ASF has been left without a chairman, among other things, the institution is involved in heavily publicized harsh exchanges and in conflicts between business entities, the signatories of the quoted letter are saying. "In the insurance sector, especially for the civil liability insurance policy segment, policies which are required by law, we are witnessing an explosion in the number of petitions, with most of them being based on the non-payment of compensations by some of the insurers. It is a very concentrated market, in which two insurance companies hold a combined 70% of the market and where the harsh sanctions from the ASF, that would discourage infringing behavior of the insurers, still haven't made their presence felt.

In the stock market department, the last few weeks have also seen a chain of scandals around various interest groups fighting for the leadership of two financial investment companies (SIFs), with general shareholder meetings held in front of the one of the headquarters of one of them, with numerous litigations, trading suspensions and even criminal complaints, the name of the institutions and one of the leaders of the ASF being at the forefront of these scandals. That is while millions of individual small shareholders of the two SIFs are looking mouth agape at what is happening, without receiving any explanations from those who are supposed to protect their interests.

In the area of the privately managed pensions, the ASF has been absent from the public debate when the very existence of the 2nd pension pillar segment was being questioned, even though its objective set by law is to ensure an efficient functioning of the private pension system and the protection of the participants' interest and of the beneficiaries".

The document is signed both by representatives of the business sector and by trade unions, consumers and independent professionals whose activity falls within the regulatory scope of ASF: the Association for the Defense of Consumer Rights and Interests (APCONS), the Association of Romanian Users of Financial Services (AURSF ), The Association of Assessors and Liquidators of Damages of Car Accidents (ACLIDER), the Association of Damage Settlement Professionals (APRD), the Confederation of Romanian Authorized Operators and Carriers (COTAR), the Association of Independent Automotive Experts (EAI), the Federation of Insurance and Banking Trade Unions (FSAB) and the Romanian Employers' Association of Insurance-Reinsurance Brokers (PRBAR).

Contacted by BURSA, most of them made their opinions known to us on the subject, while others did not want to be quoted or declined to comment on the subject.

Liberals want the dismissal of the executives of the ASF if the institution's annual activity report is rejected

While the market waits for the Parliament to appoint a head at the ASF, a controversial project on the leadership of the Financial Supervisory Authority is to be voted in the Senate plenum, after passing the Chamber of Deputies. It is a legislative initiative of the Liberals which stipulates that the heads of the ASF should be dismissed if the their annual activity report is rejected. The senators from the Committee on Budget, Finance, Banking and Capital Market do not agree, they and gave it a negative review a few days ago, to the report drawn up along this draft law.

Daniel Zamfir explained: "A few months ago the PNL submitted this draft law and it was tacitly approved by the Chamber of Deputies, together with the other legislative initiatives, when the crisis began. The text of the draft said that, if the annual activity report of the ASF gets rejected, then the leadership needs to be dismissed. The draft was definitely written with the expectation that next year, there will be a different parliamentary majority, which will need to have the option to replace the executives, in case another party gets the majority. But our watchdog institutions similar to the European ones need to have stability, you can't just take away the executives if you reject their activity report at an authority like the ASF. Imagine if things were like this in every regulatory and oversight institution? You can't gamble with these institutions, we need to have stability!"

Daniel Zamfir told us that the draft law will come into effect in the senate of the Senate, most likely next week.

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