AUSTRIA Law and Practice

Contributed by: Markus Fellner, Florian Kranebitter and Florian Henöckl, Fellner Wratzfeld & Partners

3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-advisers

Legacy players are able to develop their own robo-advisers and implement them in their business model; this also enables them to operate their business independently of external factors. So far, however, this approach does not seem to have caught on. Strategic partnerships in this area will therefore remain important for the time being.

3.3 Issues Relating to Best Execution of Customer Trades

The best execution of customer trades will ultimately depend on the programmes being integrated into the business model in the best possible way in order to make the best possible use of the technology.

However, the principle of best execution as a benchmark for possible liability must be observed when using robo-advisers. Due to a lack of sufficient empirical values, the extent to which this standard of liability can be applied directly or will require appropriate modifications is not known. However, there is no justification as to why the standard of liability should be lower. Due to the amount of data that can potentially be processed, it is likely that new standards will be set in this area.

4. Online Lenders

4.1 Differences in the Business or Regulation of Loans Provided to Different Entities

There are differences between lending to private individuals and companies. There are structural differences in the financing itself as well as different economic and legal framework conditions. For example, if an entrepreneur grants a loan to a consumer, the Austrian Consumer Loan Act applies. The Consumer Credit Act provides for comprehensive information obligations on the part of the lender to protect the borrower, and grants the borrower various rights, such as the right to early repayment of the loan.

4.2 Underwriting Processes

Industry participants use underwriting processes to conduct research on customers and their creditworthiness as well as insurability. There are no special regulations for this area, but due to automated data processing (sensitive data), data protection barriers, in particular the rights of those affected, must be observed.

4.3 Sources of Funds for Loans

The most common sources of funds for loans are classic lines of credit, peer-to-peer, taking deposits and lender-raised capital. In Austria, the central source of law is the Banking Act (BWG).

4.4 Syndication of Loans

Syndications of loans only occur in rare cases.

5. Payment Processors

5.1 Payment Processors’ Use of Payment Rails

Payment processors can use existing payment rails or may they create or implement new ones.

5.2 Regulation of Cross-Border Payments and Remittances

Cross-border payments and remittances are primarily regulated by the Payment Service Act 2018 (ZaDiG 2018).