Annual Report 2016: Financial sector stable, concerns about household debt burden and appropriateness of investment advice

The condition of the Finnish financial sector has remained stable despite the protracted downturn. From a macroprudential perspective, however, households’ growing debt burden increases risks. The European Systemic Risk Board warned of the matter in the autumn. Regulation on the maximum loan-to-collateral ratio, which entered into force at the beginning of July 2016, is among the measures aimed at restraining growth in indebtedness. ‘Reporting shows that not all banks have complied with this regulation. In addition, some banks have circumvented the regulation by offering consumer credit on top of housing credit,’ says Anneli Tuominen, Director General of the Financial Supervisory Authority (FIN-FSA).

‘The supervisor must be able to prevent excesses on the housing loan market. For this reason, we need to ensure that the macroprudential tools available to the FIN-FSA are adequate,’ notes Director General Tuominen.

In investment advice, also questionable practices in use

An inspection conducted by the FIN-FSA, which focused among other things on banks’ investment advice, identified that investment advisers had not always obtained information on the investment experience of senior customers, had counselled investment in products that were not suitable for the customer’s risk profile and gave advice, the primary aim of which appeared to be the selling of their own products.

‘Consideration of the customer’s interests must be given priority, conflicts of interest are to be avoided and customers must be able to trust in investment advice,’ Anneli Tuominen points out.

The FIN-FSA imposed sanctions for these omissions on four companies. A separate press release on the matter was published earlier today.

To request an interview with

• Anneli Tuominen, Director General, please contact FIN-FSA Communications, tel. +358 50 385 5154 (weekdays 9.00–16.00).

Read also the reports

• ​Annual Report 2016 (pdf, in Finnish)
• The Board’s report to the Parliamentary Supervisory Council 2016 (pdf, in Finnish)

The Annual Report 2016 in web format will be published in English later this spring.