Opinion of the European Central Bank of 18 September 2025 on the independence of the Federal Financial Supervisory Authority (CON/2025/29)

OPINION OF THE EUROPEAN CENTRAL BANK of 18 September 2025 on the independence of the Federal Financial Supervisory Authority (CON/2025/29) Introduction and legal basis

On 20 August 2025, the European Central Bank (ECB) received a request from the German Federal Ministry of Finance for an opinion on draft legislative proposals concerning the transposition of amendments to Directive 2013/36/EU of the European Parliament and of the Council introduced by Directive (EU) 2024/1619 of the European Parliament and of the Council (hereinafter the ‘CRD6’), including in particular a draft law amending the Law on the Federal Financial Supervisory Authority (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and Article 2(1) of Council Decision 98/415/EC as the draft law relates to the specific tasks conferred upon the ECB concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. In accordance with Article 17.5, first sentence, of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

1. Purpose of the draft law

1.1 The main purpose of the draft law is to transpose into German law the amendments to Directive 2013/36/EU introduced by the CRD6. In particular, the provisions of the draft law seek to transpose Article 4a of Directive 2013/36/EU, which relates to the supervisory independence of competent authorities and the prevention of conflicts of interest of the officials and employees of such authorities. 1.2 The draft law provides that the Executive Board members of the Federal Financial Supervisory Authority (hereinafter ‘BaFin’, Bundesanstalt für Finanzdienstleistungsaufsicht) have a renewable term of office of five years and cannot be longer in office than 14 years. In case of dismissal, the grounds for dismissal must be published, unless the Executive Board member concerned objects. 1.3 The draft law empowers the Federal Ministry of Finance to determine by means of an ordinance, to the extent that is appropriate, complementary ethics rules applicable to Executive Board members of BaFin relating, first, to private transactions regarding financial instrument and crypto-assets, and,

second, to cooling-off periods, including rules related to the prohibition of and compensation for activities within 24 months after their term of office as Executive Board members. 1.4 The draft law provides that, as far as civil servants, employees, workers, and trainees of BaFin are concerned, the Federal Ministry of Finance is empowered to determine, by means of an ordinance, the cooling-off period, with the possibility for a distinction to be made on the basis of the type of employing entity involved. Furthermore, as far as all kinds of staff are concerned the Federal Ministry of Finance is empowered to oblige them to provide, when taking up the employment and annually, a declaration of interest on specific financial assets which could give rise to concerns of conflicts of interest.

2. General observations 2.1 Article 19 of Council Regulation (EU) No 1024/2013 (hereinafter the ‘SSM Regulation’) stipulates that when carrying out the tasks conferred on it by the SSM Regulation, the ECB and the national competent authorities acting within the Single Supervisory Mechanism (SSM) must act independently. Article 31(3) of the SSM Regulation furthermore requires the ECB, in cooperation with the national competent authorities, to: (a) establish and maintain comprehensive and formal procedures including ethics procedures and proportionate periods to assess in advance and prevent possible conflicts of interest resulting from subsequent employment within two years of members of the Supervisory Board; and (b) provide for appropriate disclosures. Those procedures are without prejudice to the application of stricter national rules. The legal basis for these provisions is Article 127(6) of the Treaty. 2.2 In view of this independence and these requirements of the SSM Regulation, the ECB has established an ethics framework to ensure the independence of national competent authorities, such as the BaFin, when assisting the ECB in carrying out the tasks conferred on it by the SSM Regulation. This ethics framework includes the ECB’s Code of Conduct for high-level ECB officials , which applies, among others, to the members of the Supervisory Board of the ECB when exercising their functions as members of a high-level ECB body, and Guideline (EU) 2021/2256 of the European Central Bank , which is addressed to the national competent authorities of the SSM and establishes ethics requirements applicable to the members of their bodies and the members of staff of the national competent authorities. In view of the responsibility of the ECB for the effective and consistent functioning of the SSM , the national competent authorities must comply with Guideline (EU) 2021/2256. 2.3 In contrast to the ethics framework ultimately based on Article 127(6) of the Treaty, the CRD6, including its provision on the supervisory independence of competent authorities , is based on Article

53(1) of the Treaty. A legal act based on this provision cannot alter the rights and obligations of the ECB and the national competent authorities when carrying out the tasks conferred on them by the SSM Regulation based on Article 127(6) of the Treaty. It follows from settled case-law of the Court of Justice of the European Union that the different legal bases, namely Articles 53(1) and 127(6) of the Treaty, cannot be combined as the legal basis for a legal act, in view of the different procedures involved. In particular, the measures adopted under Article 53(1) of the Treaty are adopted by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, and after consulting the Economic and Social Committee (and, if relevant, the ECB in accordance with Articles 127(4) and 282(5) of the Treaty). By contrast, the regulations adopted under Article 127(6) of the Treaty are adopted by the Council alone, in a special legislative procedure in which the Council acts unanimously, after consulting the European Parliament and the ECB . 2.4 Hence, the amendments made by the CRD6 are without prejudice to the ethics framework which the ECB has established to ensure the independence of the national competent authorities in the context of the SSM, as both frameworks have their own scope and legal basis. The Union legislator acknowledged this through the CRD6’s amendments to Directive 2013/36/EU, which provide that Article 4a(2) of Directive 2013/36/EU is without prejudice to the rights and obligations of the national competent authorities pursuant to the SSM established by the SSM Regulation . To avoid any doubt, the national legislator may wish to clarify this within the text of the draft law. From an ECB perspective, the provisions from the CRD6 may nevertheless serve as guidance for establishing safeguards for the independence of the ECB and the national competent authorities when carrying out the tasks conferred on them by the SSM Regulation.

3. Specific observations

3.1 The CRD6 provides that Member States must ensure that members of a competent authority’s governance body can be dismissed if they no longer meet the criteria of appointment or have been convicted of a serious criminal offence . Under the Law on the Federal Financial Supervisory Authority, the member of the Executive Board of BaFin can be dismissed – upon resolution of the Federal Government – for good cause . The ECB understands that this provision – which is to be interpreted in conformity with the requirements of Article 4a(2), second subparagraph, of the CRD6 – enables , in consistency with CRD6, the dismissal of members of the Executive Board of BaFin if they no longer meet the criteria of appointment or have been convicted of a serious criminal offence.

3.2 Furthermore, the ECB understands that the draft law only supplements the Law on the Federal Financial Supervisory Authority by adding new provisions concerning the term of office of the Executive Board members (being no longer than 14 years) and concerning the public disclosure of grounds for dismissal that transpose the amendments to that effect made by Article 4a(2), second subparagraph, of the CRD6. 3.3 The ECB expects to be consulted on the draft national legislation on the empowerment of the Federal Ministry of Finance to determine, as outlined in paragraph 1.3, rules applicable to Executive Board members and all kinds of staff of BaFin relating to cooling-off periods and private transactions once this is available.

This opinion will be published on EUR-Lex.

Done at Frankfurt am Main, 18 September 2025.

[signed]

The President of the ECB

Christine LAGARDE