Romania’s Financial Supervisory Authority (ASF) has warned that government plans to restructure the institution could weaken its ability to oversee the country’s private pension system, as well as insurance and capital markets.

In a statement on its website, the ASF said the measures proposed in the draft law amending and supplementing Government Emergency Ordinance No. 109/2011 on corporate governance of public enterprises, and certain measures to streamline the activity of autonomous administrative authorities, carry significant risks.

According to the authority, these measures “have the potential to induce systemic risks in the performance of its fundamental functions, namely regulation, authorisation, supervision, and control of the non-banking financial market in Romania and its alignment with European standards in this area”.

The ASF noted that the proposed restructuring comes in the context of government efforts to reduce the budget deficit but stressed that the authority does not use resources from the state budget and is, in fact, a net contributor, transferring RON 53.5m in 2024 and projecting up to RON 85m in 2025.

In addition, the regulator warned that strict staff reductions and substantial salary cuts would mainly affect specialists, undermining expertise built up over years of supervising complex markets.

It added that such measures would “lead to the deterioration of the functioning of essential internal structures, jeopardising the fulfilment of the legal mandate and obligations under European Union law, including those relating to investor protection and the prevention and combating of money laundering”.

The ASF also highlighted that European supervisory bodies had raised similar concerns in a joint position addressed to Romania’s Ministry of Finance in July, underlining the importance of ensuring the authority’s independence and adequate resources.

The authority reaffirmed its commitment to good governance and said it had already reduced staff numbers and cut incomes in 2024, while also rolling out an EU-funded digitalisation programme.

Furthermore, it said it has submitted proposals to amend the draft law “with a view to consolidating the organisational optimisation process” that started last year, while maintaining the capacity required to meet both existing and new responsibilities under the expanding European regulatory framework.

The ASF is also caught up in the debate around the private pension system, following the government’s adoption on 21 August of a draft law that changes how second-pillar pensions are paid out, limiting lump-sum withdrawals and introducing staggered payments over eight years.

---