Legal framework of FIN-FSA regulations and guidelines

1. Regulations

Regulations issued by FIN-FSA are binding legal requirements that must be complied with. According to section 80 of the Finnish Constitution, authorities may be authorised by an Act to lay down legal rules on given matters, if there is a special reason pertinent to the subject matter and if the material significance of the rules does not require that they be laid down by an Act or a Decree. The scope of such an authorisation shall be precisely circumscribed. FIN-FSA issues regulations only by virtue of, and within the limits of, legal provisions that entitle it to do so.

Regulations issued by FIN-FSA within the set of FIN-FSA regulations and guidelines are presented under the heading ‘Regulation’. Under this heading there are no other binding legal rules (eg legal provision) or non-binding FIN-FSA guidelines.

Legal provisions authorising the issuance of regulations are made clear before the text of the regulations. If a regulation transposes an article of an EU directive into national law, a reference to the article in question may be displayed, where necessary.

2. Guidelines

Pursuant to section 3 of the Act on the Financial Supervisory Authority, FIN-FSA is responsible, among other things, for fostering compliance with good practice in financial markets and reliable corporate governance systems among its supervised entities. Performance of these tasks takes place via guidelines issued within the set of FIN-FSA regulations and guidelines. The guidelines also seek to increase legal certainty in ensuring that financial market participants know how FIN-FSA interprets legal provisions.

Guidelines issued by FIN-FSA within the set of FIN-FSA regulations and guidelines are presented under the heading ‘Guideline’. FIN-FSA guidelines mainly consist of:

  1. FIN-FSA interpretations of the contents of laws or other binding provisions;
  2. FIN-FSA recommendations addressed to supervised entities and other financial market participants, as well as other non-binding operating guidelines.

Texts under the heading ‘Guideline’ provide FIN-FSA’s views of how the relevant Act needs to be interpreted or applied in different situations. The interpretations are written in such a way that the reader clearly understands them to be FIN-FSA’s interpretations rather than unambiguous requirements laid down in the Act. This is ensured by using the expression ‘According to FIN-FSA’s interpretation …’. In connection with FIN-FSA’s interpretation, the legal provision to which the interpretation relates is clearly indicated. If the interpretation is based on detailed justifications for a Government bill, reference will also be made to the exact point in the justifications. If a direct citation of a Government bill is made without FIN-FSA’s supplementary interpretation, the text will commence with the expression ‘According to Government bill x/20xx…’.

FIN-FSA recommendations are written in such a way that the reader can clearly understand that the recommendation is a non-binding guideline. This is ensured by using the expression in the recommendation ‘FIN-FSA recommends that…’.

To clarify the factual connection of the guidelines, it may often be necessary to describe the legal provisions to which FIN-FSA’s guidelines relate. The legislative background is normally illustrated as a prior introduction to FIN-FSA’s supplementary guidance on the subject matter. In some cases, however, a description of the legislation may be provided under the heading ‘Guideline’ with a view to improving the intelligibility of the guidance.

The guidelines also include FIN-FSA’s recommendations on compliance with the guidelines issued by the European supervisory authorities (EBA, EIOPA and ESMA).

FIN-FSA guidelines are not binding legal requirements. Consequently, if a supervised entity or other financial market participant fails to comply with a FIN-FSA recommendation, FIN-FSA will not be able to take action on the grounds that a binding provision would have been violated. It should be noted, however, that if a supervised entity or other financial market participant acts in violation of a FIN-FSA interpretation of a legal provision, FIN-FSA may take action regarding a breach of law.