Preparedness
Companies in the financial sector are required to be prepared for both disruptions in normal circumstances and emergency conditions. The preparedness requirement is laid down in legislation related to financial sector companies (e.g. Credit Institutions Act, Payment Institutions Act).
The uninterrupted provision of financial market services is critical for the functioning of the economy, companies and citizens. The provision of services by Finnish financial market participants is largely dependent on foreign service providers, and therefore it is prudent to prepare for circumstances where foreign services are unavailable for an extended period of time.
The Ministry of Finance is developing regulations on the preparedness of the financial markets to be more unambiguous and better aligned with the requirements of the current operating environment (see Review of the regulations on the preparedness obligation applicable in the financial sector, Ministry of Finance publications 23/2018, in Finnish).
On 7 July 2020, the Financial Supervision Authority (FIN-FSA) issued a supervision release related to the submission of contingency plans to the FIN-FSA.
The release stated that, during the preparation of the plans, questions may be presented to the authorities on, for example, the expected content of the plans or any issues found to be unclear. These questions may be sent by email to varautuminen(at)finanssivalvonta.fi.
Questions sent to the authorities and the responses will be published anonymised on these pages so that the same information is available to all.
Question 1:
Are branches of credit institutions, investment firms and payment institutions obliged to submit the preparedness plans required in the Financial Supervision Authority's release of 7 July 2020, if they offer services mentioned in the release?
Answer: Yes, branches of credit institutions, investment firms and payment institutions must also submit the plans. Branches are also entities under the preparedness obligation in Finland.
Question 2:
Can the continuity plans be updated to take the new requirements into account (in the case of a group, broken down by company) or is a completely new document called a preparedness plan required for each company?
Answer: Existing continuity plans may be used as the basis for the preparedness plans now required, as long as the updated plans meet the requirements outlined in the release. The plans must be made in such a way that they cover the functions and services specified in the release. They may be company-specific (as long as all the services mentioned in the release are taken into account) or service-specific.
The plans must also take into account the Group’s internal dependencies with respect to the functions and services specified in the release as well as the system solutions and data warehouses required by them, and must present solutions for the continuity of services also in a situation where a part of the Group, a function or a service essential for the provision of services is not available.
Question 3:
Does the requirement to submit preparedness plans also apply to credit institutions that do not provide payment or investment services?
Answer: Credit institutions that do not provide the services specified in the draft government proposal and the FIN-FSA’s supervision release of 7 July 2020 do not need to submit preparedness plans.
Question 4:
Does the requirement to send in the preparedness plans to the FIN-FSA also apply to investment companies operating in the energy market and offering services only to corporate and community clients?
Answer: The requirement in the FIN-FSA´s release 7th July 2020 to send in the preparedness plans apply to all investment firms offering services mentioned in the release and in the Government Bill of the Ministry of Finance. Operating in the energy market or offering services only to corporate or community clients does not have an effect on the requirement.
Question 5:
Is the basic idea behind the described scenario that the data communications from Finland to other countries is hindered? Is the presumption that the domestic data communications and the services of other service providers abroad still work?
Answer: The scenario is based on the assumption that the data communications between Finland and other countries do not work or have been closed. Thus, services situated outside Finland are not accessible.
Question 6:
Are the alternative investment fund managers also obliged to send in the preparedness plans to the FIN-FSA or are they excluded from the requirement, because they have not been mentioned in the release published on the 7th of July 2020?
Answer: The FIN-FSA´s request 7th July 2020 to send in the preparedness plans applies to those companies that have been mentioned in the release and the Government Bill. The alternative investment fund managers are not in the scope of the request.