At its annual press conference, alongside publication of its 2025 annual report, Germany's Federal Financial Supervisory Authority set out a supervisory message that consumer protection carries equal weight with safeguarding financial stability. In that context, it highlighted three main areas of concern: rising cyber risk, vulnerabilities in private debt markets and comparatively risky residential mortgage lending in Germany. BaFin said it is strengthening supervision of cyber risks with additional resources for inspections at financial firms, warned that growing volumes of weakly collateralized new home loans could warrant supervisory measures, and urged caution over private-markets products being sold to retail investors. Cyber threats are increasing and attackers are using artificial intelligence to identify and exploit information technology weaknesses more quickly, requiring firms to close vulnerabilities faster. In private debt, BaFin pointed to limited transparency and interconnectedness, with risks potentially reaching the traditional banking sector through bank funding of private debt providers and through insurers' growing investments in alternative assets. For retail clients, it gave a cautious assessment of products such as European Long-Term Investment Funds, noting that underlying assets may be difficult to sell quickly without major losses, while costs can be high and valuations and disclosures opaque, and it warned investors not to rely blindly on risk indicators. On residential property lending, BaFin said roughly one in seven new loans exceeds the value of the financed property. It also highlighted stronger action against unauthorized business, including measures against organized money launderers and cybercriminals, and noted that it issued more than 800 warnings in 2025 about fraudulent offers on websites and messaging services.
BaFin2026-05-12
Germany's Federal Financial Supervisory Authority sets supervisory focus on cyber threats private debt and risky mortgages
At its annual press conference, Germany's Federal Financial Supervisory Authority said consumer protection and financial stability are equal priorities and flagged cyber risk, private debt and risky residential mortgage lending as key supervisory concerns. BaFin is adding resources to cyber inspections, warned about liquidity and transparency risks in retail private-markets products such as ELTIFs, and said supervisory action on higher-risk new mortgages remains possible. It also pointed to tougher enforcement against unauthorized business, including more than 800 fraud warnings in 2025.