The chief executive of Allianz, Europe’s largest insurance company, has called for stricter regulation of the areas where technology meets finance in the wake of the Wirecard scandal.
Oliver Bäte said in an interview with the Financial Times that this year’s collapse of the German payments company, which at one point was Europe’s largest fintech, is a symptom of a wider problem. There were likely to be similar cases in the future, he added.
“I think we have a major problem with regulation,” he said. “We need regulation for what people do rather than what they call themselves.”
European regulators treated Wirecard as a tech company rather than a financial services provider, resulting in less oversight over a sprawling business that was processing credit card payments around the world.
The company filed for insolvency in June after revealing a multiyear fraud and a €1.9bn hole in its accounts.
BaFin, Germany’s financial regulator, had direct authority over Wirecard Bank only, a relatively small and notionally independent subsidiary of the Munich-based holding company.
Mr Bäte said: “I think there’s a huge question around who is going to finally have the guts to look at the whole system and say, in a digitalised world, where is the financial risk and how do we get control of it? At the moment I don’t see anybody doing that.”
He highlighted several areas that he said needed particular attention. One is “dark pools” — trading venues that are not open to the public but account for huge volumes of trading in some assets.
“We continuously create . . . trading mechanisms where people can hide and trade outside of transparency,” he said.
He also called for changes to the way technology companies are taxed, with closer links to where their data and customers come from.
“We have not been able to tax properly,” he said. “That’s the thing I would start with . . . I’m flabbergasted by the fact that apparently we as a society cannot get our heads around it.”
The insurance industry, he believes, has room to make improvements, following its experience with coronavirus this year.
Insurers have paid out billions of euros in claims relating to the pandemic, and the Allianz chief executive said the company’s customers were happy with its service. But there has been controversy over the issue of business interruption insurance, with insurance companies resisting claims from customers around the world.
Mr Bäte said the problem lay in the wording of the policies. “You can’t really understand, when you are a business owner, your business interruption policy. It is incomprehensible.”
“If you cannot understand what you are insured for or against without the help of a lawyer, then we as an industry have a problem,” he added.