Principles of international cooperation
The international cooperation of the Financial Supervisory Authority (FIN-FSA) covers regulatory and supervisory cooperation. The FIN-FSA belongs to European System of Financial Supervision, which has three supervisory authorities: the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). The European Systemic Risk Board (ESRB), which operates in connection with the European Central Bank (ECB), and national supervisory authorities also belong to the system. In addition, the FIN-FSA engages in cooperation selectively through international forums.
The FIN-FSA is also a member of the European Single Supervisory Mechanism (SSM). The SSM comprises the ECB and the national supervisory authorities of the participating Member States.
In international cooperation, the FIN-FSA’s objectives are
- to identify risks threatening Finland’s financial markets and initiate preventive supervisory measures
- to promote effective and consistent supervision in the SSM and the Nordic countries
- to exert influence to ensure that regulation is appropriate and proportionate with regard to Finland’s financial markets
- to promote regulatory and supervisory projects for new financial products and consumer protection, and exert influence to ensure that the most consistent EU-level policies possible are adhered to in the supervision of these sectors
- to influence the introduction of high-quality supervisory practices throughout the EU, in particular by strengthening the functioning of colleges of supervisors.
In international cooperation, the FIN-FSA adopts the following approaches:
- transparency in the preparation of international matters with regard to ministries and stakeholders
- risk-based and selective influence
- high-quality and professional preparation
- cooperation based on a constructive attitude.
The FIN-FSA Board adopts the principles to be applied in international cooperation, pursuant to section 10 subsection 1 paragraph 3 of the Act on the Financial Supervisory Authority.
The Director General notifies the FIN-FSA Board of issues arising in international cooperation and brings to the attention of the Board issues of wide-ranging and fundamental importance. In particular, the Director General notifies the Board when the position of the FIN-FSA differs from the official position of Finland.
In international regulatory cooperation, the FIN-FSA ensures the transparent flow of information between domestic authorities (particularly the Ministry of Finance, the Ministry of Social Affairs and Health, and the Bank of Finland) as well as the sufficient advance preparation and coordination required for Finland to influence matters effectively. In addition, the FIN-FSA notifies stakeholders, within the framework of confidentiality provisions, about pending preparation of a statute if, in the view of the FIN-FSA, the statute will have a material effect on the activities of stakeholders.
To the extent permitted by confidentiality provisions, the FIN-FSA notifies the industry particularly about issues dealt with in the EU’s network of supervisors.
The FIN-FSA Board has appointed the Director General as the FIN-FSA’s representative on the Supervisory Board of the SSM. The Director General or a person nominated by the Director General represents the FIN-FSA in other international bodies.
Participation in the work of a working group is decided in accordance with the procedure agreed in the FIN-FSA. A person responsible for the work is appointed. This person handles notifications on the progress of the work and outlines the positions to be presented concerning the matter within the FIN-FSA. More detailed procedural instructions may be issued in separate internal guidelines.
Under the SSM Regulation1), the members of the Board of Supervisors shall act independently and objectively in the interest of the Union as a whole and shall neither seek nor take instructions from the institutions or bodies of the Union, from any government of a Member State or from any other public or private body. A corresponding requirement for independence is laid down in regulations on the European Supervisory Authorities for the members of the Board of Supervisors (BoS).
1) Council Regulation (EU) No 1024/2013 of 15 October 2013 concerning policies relating to the prudential supervision of credit institutions.
The European Supervisory Authorities (ESAs) are part of the official organisation of the EU. They aim to promote cross-border supervisory cooperation, ensure consistency of supervisory practices, reduce unfair competition between supervisors and promoting equal conditions of competition. The ESAs may draft regulations which, as such, are binding on the Member States. In addition, the ESAs prepare advice for the Commission as well as guidelines and recommendations. In addition to practical supervisory cooperation, supervisory practices are harmonised in the colleges of supervisors and through peer reviews. Cross-sectoral supervisory and regulatory issues are addressed in the Joint Committee of the European Supervisory Authorities.
The European Systemic Risk Board (ESRB) is responsible for macroprudential oversight of the financial system. It assesses macroeconomic risks from the perspective of the EU financial sector as a whole. The ESRB includes representatives from national central banks and supervisory authorities of EU Member States.
Pursuant to the Act on Financial Supervisory Authority, the FIN-FSA shall fulfil its mission in the European System of Financial Supervision regarding the regulation of financial markets in cooperation with the Ministry of Finance, the Ministry of Social Affairs and Health and other competent ministries. The FIN-FSA shall immediately inform the ministry responsible for the preparation of financial market legislation and the functioning of financial markets of a technical standard under preparation by a European Supervisory Authority, if the FIN-FSA considers that the technical standard may have an impact on Finnish legislation, or of any other matter under consideration by a European Supervisory Authority, if the FIN-FSA considers that it may have an impact on the functioning or stability of Finland’s financial markets.
In its own international operations, the FIN-FSA seeks to promote, on the basis of its own independent decision-making, supervisory and regulatory guidelines that are consistent with the policies of the Finnish Government. Agreements have been made with the Ministry of Finance and the Ministry of Social Affairs and Health regarding financial sector technical standards under preparation in European Supervisory Authorities and cooperation on other matters.
The SSM Regulation assigns to the ECB prudential supervision tasks. The ECB directly oversees all ‘significant’ euro area banks in close cooperation with national supervisory authorities. The ECB is indirectly responsible for the supervision of less significant, smaller banks carried out by national supervisory authorities.
The Supervisory Board is responsible for preparing supervisory guidelines and draft supervisory decisions. Supervisory decisions are adopted by the ECB Governing Council. The actual operational work of the SSM began in November 2014. With regard to significant credit institutions, the practical supervisory work is done in Joint Supervisory Teams (JSTs), consisting of ECB staff and representatives of national competent authorities.
The FIN-FSA may contribute to and participate in the making of supervisory Memoranda of Understanding with other supervisory authorities in order to enhance and clarify the supervision of the activities of foreign actors in Finland or the activities of Finnish actors in other countries. Specification by agreement of the principles of supervisory cooperation is sought in cases where an agreement may enhance and clarify supervision compared with a situation in which no agreement exists. The activities of colleges of supervisors for multinational groups should be based on Multilateral Memoranda of Understanding. Supervisory authorities also participate in such colleges with regard to significant branches. In the preparation of Memoranda of Understanding, attention must be paid to the competence of the FIN-FSA and the provisions of the Act on the Financial Supervisory Authority otherwise must taken into account, including the compensation to be levied (or paid) pursuant to section 67 of the said Act.