Supervision focuses on economic uncertainty, cyber security and longterm changes in the operating environment
The objective of the Financial Supervisory Authority’s new strategy 2023–2025 is to be a proactive and predictable supervisor
“As a supervisor, we have to recognise changes in the operating environment and anticipate the implications for our supervisory responsibility. We are also consistent and predictable in our own actions towards supervised entities,” says Tero Kurenmaa, Director General of the Financial Supervisory Authority (FIN-FSA).
According to section 1 of the Act on the Financial Supervisory Authority, the FIN-FSA’s mission is “We ensure financial stability and confidence in the financial markets and enhance the protection of customers and investors and insured benefits”.
Supervision impacted by long-term changes in the operating environment and topical events
The FIN-FSA’s strategy and operational planning for 2023 takes into account both longer-term development trends in the operating environment and highly topical phenomena.
Supervision is impacted by long-term changes in the operating environment such as climate change, digitalisation, and demographic factors like the changing population structure. European-level regulatory development is also partly responding to these phenomena. At the same time, regulatory development in itself is impacting supervision.
Strategy and operational planning are also strongly influenced by topical phenomena such as the changing geopolitical situation, developments in the economy, and increasing cyber threats. The FIN-FSA safeguards the financial sector’s ability to provide payment and other basic services regardless of geopolitical events.
The strategy’s emphasis on proactivity as well as organisational flexibility and changeability supports the FIN-FSA’s capacity to respond to topical phenomena in the operating environment.
Supervisory priorities in 2023 respond to changes in the operating environment and European supervisors’ common areas of focus
During the year, the FIN-FSA will conduct thematic assessments involving several undertakings as well as supervised-entity-specific inspections.
In the banking sector, the FIN-FSA’s thematic assessments and supervised-entity-specific inspections will follow the supervisory priorities of the European Central Bank (ECB): strengthening banks’ resilience to immediate macro-financial and geopolitical shocks, ensuring that banks address digitalisation effectively and strengthen their management bodies’ steering capabilities, and stepping up efforts to address climate change. Other themes for the prudential supervision of banks in 2023 are credit and liquidity risk management, compliance with interest rate risk regulations, and sound governance issues.
With regard to banks’ conduct and operational risks, as a result of the changed cyber security situation, the supervisory priorities are ICT outsourcing, cyber risk management, online and mobile banking security as well as payment services abuses and the compensation process. In anti-money laundering supervision, the focus is on customer due diligence and assessing customer relationship risks.
With regard to investment services and fund undertakings, the fulfilment of sustainability information disclosure obligations is emphasised in the work of both the European Securities Market Authority (ESMA) and the FIN-FSA. The FIN-FSA also evaluates the impacts of the challenging macroeconomic situation on the IFRS financial statement information of listed companies as well as audit committees’ actions in the implementation of sustainability reporting. With regard to funds, the stress tests of real estate funds and the soundness of the corporate governance of registered alternative fund managers are evaluated.
In addition to assessing the effects of the operating environment, such as the uncertain investment outlook and inflation, insurance supervision will focus on follow-up of previous inspections and thematic assessments. In the entire sector, with regard to pension, non-life, life and unemployment insurance, an emerging theme is the soundness of corporate governance. In the supervision of conduct, supervision focused on compliance with statutory obligations related to customer protection, such as regulatory deadlines, will continue. In accordance with the priorities of the European Insurance and Occupational Pensions Authority (EIOPA), more detailed supervision of conduct is a growing theme in the supervision of insurance undertakings.
A summary of the FIN-FSA’s assessment and inspection plan can be found here. Assessments and inspections will be reprioritised as necessary, if so required by changes in the operating environment.
The FIN-FSA communicates thematic assessments directed at broader groups of supervised entities on a general level in the form of supervision or press releases. Inspections made of individual supervised entities and the results thereof are not disclosed. More detailed investigations may be launched on the basis of the findings of thematic assessments and inspections.
For further information, please contact
Jyri Helenius, Deputy Director General of the FIN-FSA