FIN-FSA proposes amendments to legislation on administrative sanctions

The FIN-FSA proposes that financial sanctions such as penalty payments be extended to cover insurance sector entities and central bodies of deposit banks more extensively than at present.

The Financial Supervisory Authority (FIN-FSA) has submitted a legislative proposal to the Ministry of Social Affairs and Health and the Ministry of Finance for the purpose of widening the scope of application of financial sanctions. In its proposal, the FIN-FSA states that legislation on administrative sanctions should be supplemented and harmonised in the various segments of the financial sector to provide the FIN-FSA with adequate powers to address unlawful action also by means of financial sanctions. Harmonisation of regulation is also necessary from the perspective of competition neutrality among the various financial sector segments.

The FIN-FSA proposes that the scope of financial sanctions, especially the penalty payment, be extended to cover, in the insurance sector, at least life and non-life insurance companies, employee pension insurance companies, company- and industry-wide pension funds as well as unemployment funds, in respect of, for example, violation of internal governance regulations.

Furthermore, the FIN-FSA proposes that the scope of application of the penalty payment be extended to cover, in the financial sector, especially the central bodies as referred to in the Act on a consolidation of deposit banks, due to the significant role of these entities. At present, the FIN-FSA may in effect impose penalty payments based on its supervisory findings on individual member credit institutions only, even when the omissions may be similar among member credit institutions due to, for example, insufficient guidance by the central body. To attain an adequate steering effect, the FIN-FSA should be able to impose a penalty payment on central bodies as well, if necessary.

In its proposal, the FIN-FSA also sets forth that the law should provide the supervisor with adequate discretion in making decisions on the allocation of its resources. The supervisor should be able to impose administrative sanctions in accordance with its supervisory priorities and allocate resources to more significant omissions, while deciding not to inspect and impose sanctions for less important issues, if necessary.
  
If accepted, the legislative proposal would widen the range of the FIN-FSA’s supervisory tools and provide the authority with legislative support in using discretion. Widening the scope of application of penalty payments would also serve to improve regulatory compliance and thereby enhance the preventive impact of the sanctions system.

Further information

Sonja Lohse, Chief Advisor

Requests for interviews are coordinated by FIN-FSA Communications, tel. +358 9 183 5030, weekdays 9.00–16.00.

Attachment

FIN-FSA proposal amending legislation on administrative sanctions (in Finnish, pdf)