Thematic review: Procedures concerning related party and close circle lending
In 2025, the Financial Supervisory Authority (FINF-FSA) examined the maintenance of related party information, as well as the procedures concerning related party loans and other transactions, based on a sample of credit institutions under its direct supervision. The purpose of the thematic review was to assess compliance with Chapter 15, Section 13, and Chapter 5, Section 15 of the Credit Institutions Act (610/2014), as well as with the EBA Guidelines on internal governance (EBA/GL/2021/05) regarding maintaining registers of related parties, granting loans to and entering into other transactions with related parties as well as the internal control framework.
FIN-FSA identified in the thematic review the following deficiencies. The observations are based on the information submitted by banks.
- Banks’ internal guidelines for related party registers and related party lending were partially deficient or inconsistent, particularly regarding managing conflicts of interest, granting loans, and documentation of processes, roles, and responsibilities for maintaining this information.
- There were shortcomings in verifying related party information against external sources, especially in investigating potential company affiliations of natural persons in the close circle.
- Related party registers are generally maintained separately from the core banking system, and data transfers are performed manually and with a delay.
- Risk assessments for loans granted to related parties follow the standard credit risk assessment process, lacking considerations specific to related party lending, such as conflicts of interest, reputational risk, or other potential impacts on the institution.
- Decision-making regarding related party loans and transactions was partially delegated from the board of directors to lower decision-making levels based on the type, amount, or terms of the loan. However, thresholds for when to delegate decision-making were not always defined.
- The reporting on related party lending to the board of directors was partially insufficiently detailed (amounts, conditions, decision-making levels) or completely missing. Banks’ internal instructions were insufficiently comprehensive regarding reporting to the board of directors.
The FIN-FSA’s measures
The observations will be used as basis for the targeting of supervision. The FSA expects that the supervised entities remediate the deficiencies observed in the assessments. The FIN-FSA has sent bank-specific supervision letters.
For further information, please contact
- Mikaela Carlström, Chief Supervisor, telephone 09 183 5035 or mikaela.carlstrom(at)fiva.fi
- Kristiina Lehtola, Chief Supervisor, telephone 09 183 5324 or kristiina.lehtola(at)fiva.fi
- Terhi Vähäkuopus, Chief Supervisor, telephone 09 183 5484 or terhi.vahakuopus(at)fiva.fi