Hungary’s answer to regulatory incompetence: create more bureaucracy!

June 18, 2015

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Hungarian pro-government daily Napi Gazdaság reports that the government intends to create a new regulatory oversight body to thwart further banking and brokerage scandals and prevent tax fraud.

The new regulatory agency will be tasked with supervising the work of bookkeepers, tax advisors, qualified tax experts, accountants and auditors. The agency would be involved in revising professional training standards, issuing operating permits, supervising work and, in the event of wrongdoing, imposing penalties.

Ministry for National Economy deputy undersecretary Zoltán Pankucsi told Napi Gazdaság that it is the responsibility of the government to make sure companies who hire bookkeepers, tax advisors and auditors are provided reliable and high-quality services.  The undersecretary emphasized the importance of this in combatting the black economy.

Hungary was rocked earlier this year by a string of three brokerage scandals.  Numerous opposition politicians and experts have criticized the National Bank of Hungary for failing to properly regulate financial institutions.

Created in 2000 for the purpose of regulating the activities of banks and financial institutions, the Financial Organizations State Oversight Authority (PSZÁF) was taken over by the National Bank in 2012 shortly after the appointment of central bank governor György Matolcsy.  The decision was justified to the public at the time as “a cost-saving measure”.

In retrospect, the decision appears to have ended up costing the nation`s taxpayers and banking community over HUF 200 billion in compensation paid out to the victims of failed financial brokerage firms Buda-Cash, Hungaria Securities and Quaestor.

Referenced in this article:

Új, nagy állami szerv jöhet létre, napi.hu; 18 June 2015.