The new management of ASF is waiting for the Parliament's vote, after the mock hearings from the assembled commissions

The Financial Supervision Authority is waiting for the vote tonight or tomorrow by the plenary of the Parliament which will confirm the choice of the new management team made yesterday by the members of the joint committees of the budget, finance, banks, by the members of the economic committee, industry and services in the Senate and by the members of the committee for economic policy, reform and privatization from the Chamber of Deputies.

According to art.8 paragraph 2 of GEO 93/2012, regarding the establishment, organization and operation of the ASF successively amended - most recently by law 147/2021 - and republished, "The members of the ASF council are appointed by the Parliament, in the joint meeting of the two Chambers, at the joint proposal of the Committee for Budget, Finance, Banking and Capital Market and the Committee for Economy, Industry and Services in the Senate and, respectively, the Committee for Budget, Finance and Banks and the Committee for Economic Policy, Reform and Privatization of The Chamber of Deputies".

As the United Permanent Bureaus of the two Chambers decided yesterday to postpone for this evening the plenary session originally scheduled for Monday at 2:30 p.m., then moved to 3:30 p.m., the joint proposal of the reunited commissions will be submitted to the plenary in the session that is scheduled to starts tonight at 8 p.m., when the state budget laws and the state social security budget will be debated and voted on. According to the decision of the United Permanent Bureaus, if the plenary session does not end tonight, it will continue tomorrow.

At yesterday's joint meeting of the four commissions, Alexandru Petrescu was approved as president of ASF, Gabriel Avrămescu was voted for the position of first vice-president, Gabriela Horga - vice-president for the capital market, Sorin Mititelu - vice-president for the insurance market and Daniel Armeanu - vice-president for private pension funds, the last being the only one from the Authority's former management team whose mandate was renewed by the Parliament.

Aura Socol, Ovidiu Wlassopol, Jozsef Birtalan and Andrei Rizoiu will also be part of the Board of Directors of ASF as non-executive members - following the vote of the combined committees of budget, finance, banks -.

Unfortunately, the hearings for the future leadership of the ASF have shown that the incompetence of this public institution in recent years is based on incompetence, carelessness or ignoring the importance of the selection process for the members of the Board of Directors organized by the Parliament.

Given that the ASF annually oversees markets that carry out business of tens of billions of euros, to allocate only 90 minutes for the hearing of all candidates, in which each of them had two minutes to present themselves, to say what experience has and what he wants to do at the ASF, and in which each parliamentary group had only one question for each candidate, would represent gross negligence on the part of the leadership of the two budget, finance, banks committees in the Senate and the Chamber of Deputies. Or, perhaps, that the election of the new ASF Council took place before, in a different political framework, at the level of the leadership of the PSD-PNL parliamentary coalition, and the hearing from the meeting of the four assembled commissions had only a formal framework, because from the point of view informally the decision was already made.

It is certain that the way in which the four commissions organized the mock hearing of the new management of the ASF did not have the gift to clarify whether its members have the appropriate solutions to stop witnessing what the BURSA newspaper reported in recent years: concentrations at SIFs and three bankruptcies in the insurance market.

It is less important what the monthly salary income of the new management will be, if it will take 14 or 16 salaries annually - as the deputy Claudiu Năsui showed interest during the meeting - but more important is what the new management of ASF will do to change the indolent mode of activity patronized in recent years by Nicu Marcu, under the supervision of the Cooperative.

• Fast-forward hearings

Regarding the time allocated to the hearings, this was a subject of contradiction at the beginning of the meeting between the representatives of the PSD-PNL parliamentary majority and those from the USR. Bogdan Huţucă, the president of the Committee on Budget, Finance, Banks in the Chamber of Deputies, argued for the allocation of only 90 minutes, in light of the fact that from 12 o'clock, in the presence of the Minister of Public Finance, Marcel Boloş, the assembled committees were to start the debate on the articles of the state budget law and the social and health insurance budget law. That's why the leaders of the four commissions proposed allocating two minutes for each candidate, after which each parliamentary group has the right to one question.

Bogdan Huţucă's proposal was contested by deputy Claudiu Năsui (USR), who said: "It's a joke. It is about a dysfunctional state institution

in which we have to clarify what to do and how to continue the activity. It's a joke to give us only a parliamentary group question".

Despite all the opposition of USR and AUR members from the four parliamentary committees, the proposal regarding the allocation of time for the hearing made by the PSD-PNL coalition was voted by the majority of senators and deputies from the respective committees, with only 10 votes against and one abstention.

So all the candidates had to present in two minutes a summary of their CV and what they plan to do. Gabriel Avrămescu, candidate for the position of first vice-president of ASF, was among the first to be heard, who showed that he was employed in a banking institution for one year and then worked at ANAF for seven years. Since 2020, he is a deputy. Avrămescu concluded: "Considering the duties for the position of first vice-president, I consider that the previous activity belongs to them".

Asked by Claudiu Năsui, what is the difference between MCR and SCR, Gabriel Avrămescua answered: "Unfortunately, there are not enough specialists in ASF, but when we have a body of specialists we will have the opportunity to make changes on the transparency and digitization side"

In response, Claudiu Năsui said: "He didn't answer. Extraordinary. 16 salaries per year, for something like that".

Fortunately, Gabriel Avrămescu answered very well the question regarding public procurement procedures regulated by law 98/2016, listing them all.

• Alexandru Petrescu: "I support occupational pensions"

Alexandru Petrescu, who received the vote of the assembled commissions for the position of president of the ASF Council, emphasized that he supports the development of occupational pensions, a system in which he participated as a contributor, outside of our country.

His Majesty stated: "The ASF supervises seven Pillar II pension funds, ten Pillar III pension funds and I would like to see, in my mandate, at least one Pillar IV fund established and active. From my point of view, it will be the answer to special pensions. I support occupational pensions. I worked in different jurisdictions and in different European administrations and contributed to an occupational pension. It is a type of pension that I believe in and I will seek to encourage the adoption of contributors, operators, to this type of pension fund".

Regarding the RCA market, Petrescu pointed out that he will consider rethinking the prudential supervision system and creating an environment to attract new players to the market.

"The situation in the RCA market is very sensitive. Given that we have a concentration of almost 70% on RCA, my main concern will be on two elements. First of all, rethinking a prudential supervisory action, which would prevent the economic degradation of an actor . Because the economic degradation of a solvency capital does not appear overnight (...). You can identify the elements of degradation in time, you can correct and eliminate them. We also want to create a climate in which new players come to the market" , said Alexandru Petrescu.

Regarding the accusations regarding the collection of illegal bonuses from the Romanian Post Office, the one who was elected as the president of the ASF said: "I could not give myself bonuses. It was a decision of the AGM, which generated a lawsuit with the Court of Accounts, which was won in my favor".

Gabriela Horga, who obtained the votes in the assembled commissions for the position of vice president - Financial instruments and investments sector, within the ASF, stated that an institution that achieves its objectives will never be contested from the point of view of remuneration. His Lordship pointed out that he promoted the initiative related to the simplification of taxation for investments in capital market securities, which led to the broadening of the tax base and the increase in the number of investors. "It's about taxing long-term holdings with 1%, short-term holdings with 3% and withholding tax," said Garbriela Horga.

Regarding the effect of this law on the market, Gabriela Horga specified: "The capital market develops when we also address the retail segment. We have a problem in this sense, in attracting small investors. According to FCI (ed. - Investor Compensation Fund), in September 2023 the number of investors was 168,000, up from 130,000 on January 1, 2023, when the law entered into force. Obviously, the increase in the number of investors is not only due to the way of taxation, because in 2023 we also had the listing of Hidroelectrica, a great success and the largest initial public offering in Europe. The number of investors in investment funds also increased, reaching around 650,000, several tens of thousands of investors more than at the beginning of the year. So there is potential for development including in the retail segment".

Regarding the payroll system of the Financial Supervisory Authority, Gabriela Horga stated: "Not only in ASF, but in any institution, the salary system must be calibrated according to the competence of that institution and the way it achieves its objectives. An institution that achieves its goals will never be challenged in terms of pay. Of course, the salary must be competitive and at the market level, the regulations change, the methods change, we are talking about digitization, crypto-assets, things for which specialists are needed".

Another candidate for an executive position - more precisely for the position of president of ASF -, Alin Chitu, former secretary of state in the Ministry of Finance, did not appear at the hearing and, consequently, was not subject to the vote of the assembled commissions.

• Sorin Mititelu: "We will do an analysis related to the way RCA prices are formed"

The Financial Supervisory Authority can influence the price of an RCA policy by ensuring fair competition between participants, said Sorin Mititelu, who obtained the votes of the members of the assembled commissions for the position of vice president - Insurance-reinsurance sector, a field marked in recent years by the bankruptcy of City Insurance and Euroins.

Regarding the measures he plans to take to normalize prices in the RCA market, Sorin Mititelu said: "The RCA market is very important. However, we must keep in mind one very clear thing - the insurance premium is the result of some objective factors. It is a price that is determined objectively, related to what exists in the market. Therefore, we can influence, although influencing is too much to say, the evolution of the price, by ensuring a fair competition between the participants. Also, by imposing good practices and more efficient processes".

His lordship added: "Obviously we will have an analysis related to the way prices are formed and what were the elements that had an impact on the final result, in the price set by each individual company (...). But it is certain that the premium must be the result of some objective elements - the harmfulness, the normal operating costs and of course the competition in the market".

Also, Sorin Mititelu was asked what are the main objectives in order to increase the efficiency of the private pension system. Another question was related to the main problem of the RCA market and what solutions can be found.

Mr. Mititelu said: "As far as pension funds are concerned, there are two types of systems. It is the Pillar II and Pillar III system. Pillar II represents a system that works; the increases in volumes prove it. An increase in efficiency is necessary in the area of Pillar III (...). As for the problems in the RCA market, there are inefficiencies in the process. I mean this very high frequency of damage events. We need to identify solutions with other market partners. Also, a number of improvement solutions are possible (...) a general increase in insurance activity decreases from the pressure of operating costs".

This year, only one premium was collected at the Financial Supervisory Authority, said Dan Armeanu, the current vice-president of ASF - Sector of the private pension system, who obtained, yesterday, from the parliamentary committees, the necessary votes for the renewal of the mandate in the position he occupy it.

"The premiums are those collected by all members of the Council last year, those that are provided for in the CCM (ed. - Collective Labor Agreement). This year, only one premium was collected (ed. - at ASF)", stated Dan Armeanu, answering a question.

The vice-president of the ASF was also asked what is the difference between the absolute guarantee and the relative guarantee for pensions. His Majesty stated: "At the level of the pension system, the guarantee is represented by the cumulative level of contributions, but in this case we have a provision. In the situation where the value of the asset falls below the level of the respective guarantee, the provision is used and there is still a relative guarantee given by the minimum profitability threshold. When the return of the funds falls below the minimum rate of return for four quarters, then other mechanisms also intervene".

Also, Armeanu was asked what the price of an insurance is composed of, from the point of view of those who form it. The vice-president of the ASF answered: "From a theoretical point of view, the premium is made up of the net premium plus the premium addition. The premium addition is used for shareholder remuneration, for the establishment of technical reserves at the level of the insurer and for other operating expenses of the insurer. The net premium is what practically quantifies the value of the risk. There are several methods of determining the net premium, depending on the frequency of the claim and the estimated average claim. In addition, there are certain loading factors (...). In the end, the net premium is obtained. To this is added the premium addition and you get gross prime at the insurance level".

• Wlassopol - reconfirmed as a member of the ASF Council

Ovidiu Răzvan Wlassopol was approved positively for the renewal of his mandate as a non-executive member of the ASF Council. Asked about the performance bonus received from the Authority, Wlassopol said: "I am the only one on the ASF board who last year voted against the employment contract approved by the ASF. We have to look at salaries and look according to the market and what is happening in the lives of Romanians and see. I only have one vote".

Aura Socol also received the approval from the four parliamentary commissions for the renewal of the mandate of non-executive member of the ASF Council, even if she entered into a verbal dispute, during the hearing, with the USR deputy, Claudiu Năsui. He told Ms. Socol: "5 years ago I asked you a technical question and you didn't answer me. Now I hope you are better prepared. What performance premium did you collect last year and whether you believe ASF performed for these premiums. What does VAR (n.ed. - Value at Risk) mean?"

Aura Socol answered: "Last year I don't know what the value of the performance bonus was, but this year we didn't collect the performance bonus. 5 years ago I assured you that I know exactly where to look in case I need it. In the event that I need to know what VAR means, rest assured that I will know where to look."

Jozsef Birtalan will also benefit from the renewal of his non-executive member mandate, who was asked if he is interested in the reform of the ASF salary system. "I think the salary system needs to be reformed, it's good to restore it", said Jozsef Birtalan, who mentioned that as far as RCA is concerned, the reduction of tariffs can be achieved in the medium and long term, together with the decrease in the number of accidents.

At yesterday's meeting, other candidates were heard for the position of non-executive member of the ASF Council, but they did not receive the necessary votes to enter the Authority's management structure. One of them is Călin Rangu, who stated that, from his point of view, in the next period in the field of insurance, the FSA must emphasize consumer protection. He also presented a solution to solve the problems in the RCA market: "There is a model in which everything is integrated, including the authorization system. The problem is that damage assessment is not under the supervision of ASF according to the current legislative framework. An ecosystem must be created to reduce human intervention and use technologies that provide integrated data."

Unfortunately, things were not favorable for the Oradean university professor Ioan-Gheorghe Ţara, to whom the commissions refused to renew the mandate he received five years ago, although he said that, in case of renewal, he would follow some important aspects to improve ASF activity.

Ioan-Gheorghe Ţara stated: "In the area of insurance and pensions, measures are needed to reduce the risk of concentration. At this moment there is a high degree of concentration which presents the risk of generating fraud. We must reduce these risks through legislative regulation".

Furthermore, Mr. Ţără said that the allowances granted within the ASF must be consistent with performance, but he declared against the salary reduction within the Authority.

Sorin Florescu, an ASF employee, also received a negative opinion from the assembled commissions. Asked if there is a contradiction between the surveillance activity and the self-financing of the ASF, Sorin Florescu said: "If the self-financing of the ASF generates a conflict of interests? We are not the only authority that is self-financing, and I do not consider that self-financing generates a conflict of interest because it is provided for in the law approved by the Parliament".

Deputy Claudiu Năsui wanted to know if the ASF employee knows the major differences between the Solvency 1 and Solvency 2 European directives, in the matter of insurance, and Sorin Florescu answered: "When we talk about the ASF, like the BNR, we are talking about specialists who supervise the three markets. And the sorting must be done at your place and we want it to be exemplary. Regarding Solvency 2, it strengthened the solvency criteria of insurance companies and prudence. It should have strengthened prudence in our country as well, and we should not have reached the negative examples in the insurance market from the recent period".

Cătălin Mancaş, who was employed at two banks, also missed entering the ASF Council, as did Mircea Oancea, who was the first president of the Supervisory Commission for private pensions. Mr. Oancea specified that "the role of ASF remains important in communication with consumers of non-banking financial products". Asked what he knows about an indicator from the insurance market and if he has any intention to reform the salary system within the ASF, Mircea Oancea answered: "I have not worked in the insurance system and I do not know that indicator and my experience, when I have something to solve, I document myself, I consult with specialists in order to make the best decision. If I were to become a member of the ASF Council, I would opt for a salary appropriate to the objectives of the ASF and in terms of each person's skills. I opt for a salary based on skills. I do not opt for a lower salary than the current one".

After hearing all the candidates, the members of the commissions voted for each of them separately, and the result of the vote was as follows:

- Daniel Armeanu: 24 votes for, 2 against.

- Gabriel Avrămescu: 26 votes for, 8 against, one abstention.

- Birtalan Joszef: 26 votes for, 7 against, one abstention

- Sorin Florescu: 30 votes against

- Gabriela Horga: 28 votes for, 8 against

- Mancaş Cătălin: 30 votes against

- Sorin Mititelu: 26 votes for, 5 votes against

- Mircia Oancea: 30 votes against

- Alexandru Petrescu (president): 27 votes for, 7 votes against, zero abstentions

- Călin Rangu: 4 votes for, 2 votes against, 23 abstentions

- Rizoiu Andrei: 16 votes for, 13 votes against, 6 abstentions

- Aura Socol: 27 votes for, 5 votes against, one abstention

- Radu Toia: 21 abstentions, 1 vote against

- Ioan-Gheorghe Country: 26 abstentions

- Ovidiu Răzvan Wlassopol: 26 votes for, 6 votes against.

After that, the members of the assembled commissions approved the new ASF Council, with 26 votes for and 7 against.

Thus, the new ASF Council, if it also passes the plenary session of the Parliament, will have the following composition: Alexandru Petrescu - president, Gabriel Avrămescu - first vice-president, Gabriela Horga - vice-president responsible for the capital market, Sorin Mititelu - vice-president responsible for the capital market insurance, Daniel Armeanu - vice president responsible for pension funds and non-executive members Ovidiu Wlassopol, Aura Socol, Jozsef Birtalan and Andrei Rizoiu.