In October 2002 the Finnish government issued a proposal to the Finnish parliament to replace the existing Finnish Act on Financial Supervision by a new Act of the same name. The purpose of the proposed Act is to intensify and make more efficient financial supervision through a number of amendments to the supervisory measures and powers available to the Finnish Financial Supervision Authority (FSA) and to increase the authority of the FSA.
According to the proposed Act, the FSA will supervise the stability and reliability of the entities operating in the financial markets. The aim is further to increase the level of transparency of the operations of the FSA. Under the new legislation, the banking commission of the Finnish parliament would become responsible for supervising the FSA's operations.
To ensure that the FSA's supervision is efficient, the Act contains new supervisory powers and duties. The current powers and supervisory tools available to the FSA have been criticized, especially by the media, as being inadequate. Under the proposed Act, the FSA would, in addition to its current powers, be able to issue a public complaint or a public warning to both supervised entities and other entities operating in the Finnish financial markets. A public complaint or warning could be issued when entities broke the laws and regulations governing the financial markets. In addition, the FSA would be able to prohibit individuals considered unreliable or unfit from acting as board members or managing directors of a credit institution or investment firm.
In addition to these expanded supervisory powers, the FSA would also have the authority to decide on the granting of licences to credit and financial institutions or investment firms. The FSA would also have the right to withdraw any such licences. At present the Finnish Ministry of Finance deals with all licensing issues. The Ministry would also become responsible for issuing licences to act as a stock exchange, a securities depository or a clearing-house.
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