In May 2002 the Ministry of Finance proposed a new Financial Supervisory Authority Act. The proposed changes expand the powers of the Financial Supervisory Authority (FSA) and improve its functions and administration. The bill aims to ensure efficient and flexible financial supervision of the rapidly changing financial market. It is also intended to maintain public confidence in the financial markets.
According to the bill the board of directors of the FSA will consist of members from outside the agency. The board will have the right to resolve the most important matters regarding supervisory duties, for example the granting of licences and issue of administrative sanctions.
The proposal extends the FSA's supervisory powers and rights of access to information. Further, it gives the FSA powers to order the continuous provision of information on the financial status of a supervised entity, its owners and board members, and its risk management systems.
The FSA will also be able to impose administrative orders (ie, public declarations or warnings) and penalties on financial operators. The maximum administrative penalty proposed is €50,000 for legal entities and €5,000 for private persons.
The current legislation does not allow the FSA to intervene in the case of less significant breaches, for example in cases which do not require a revocation of licence. Administrative penalties may not be imposed for actions that are criminalized elsewhere in legislation, or applied in circumstances where duties stipulated by the Securities Market Act have been violated. Both exclusions have been criticized by the FSA.
The most significant change proposed is that the power to grant and revoke licences to credit institutions and merchant banks be transferred from the Ministry of Finance to the FSA. This is intended to expedite action against serious misdemeanours in financial service operations. The FSA would also be able to prohibit a person from acting as a member of the board of directors, or as a managing director of a supervised body, if that person does not meet the requirements and criteria set forth by law.
For further information on this topic please contact Ari-Pekka Saanio at Borenius & Kemppinen by telephone (+358 9 615 333) or by fax (+358 9 61 53 34 99) or by email
([email protected]).