Supervisory Evaluation of Compliance (SEC) 

The FIN-FSA must take action if the supervised entity's Internal Capital Adequacy Assessment Process (ICAAP) or its outcome falls short of the requirements. In the Supervisory Review Process (SRP), supervisory measures may be considered during the dialogue between the supervised entity and the FIN-FSA, in the assessment of the fulfilment of minimum requirements, or on the basis of the outcome of the Supervisory Review and Evaluation Process (SREP). If failure to comply with the minimum requirements under chapter 5 of the Credit Institutions Act or FIN-FSA standards issued by virtue thereof is identified in the SREP, the FIN-FSA may require that the supervised entity take remedial action forthwith. Depending on the situation, such action includes risk mitigation, measures for protection against risks or changes in risk management systems or administrative processes. Where necessary, the FIN-FSA may order the supervised entity to comply with the requirements under penalty of a fine if the negligence is not minor. The FIN-FSA may also prohibit the use of such financial instruments or other business activities, when the credit institution fails to adequately manage their inherent risks.

The FIN-FSA may impose a regulatory capital requirement in excess of the minimum capital requirements on a supervised entity that does not have sufficient regulatory capital to meet the capital needs relative to the risk profile and institution-specific features. The additional capital requirement may be imposed in a situation where deficiencies have been identified in the internal governance, internal control, general risk management, ICAAP or customer risk management process of the supervised entity. A further requirement is that the capital adequacy cannot be ensured in any other way. The additional capital requirement may also be imposed on similar terms on the basis of the supervised entity's consolidated financial standing.

In certain cases the negligence may also lead to the imposition by the FIN-FSA of an administrative sanction in the form of a public reprimand or public warning. If the other measures are inadequate to bring about cessation of the unlawful activities, the FIN-FSA may withdraw the supervised entity's authorisation.

The information disclosed by other EU countries' prudential supervisory bodies can be found on the EBA Internet site. 

28 April 2011