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Finland prepares for Moneygeddon

Chris Hamblin, Editor, London, 24 July 2020


The provision of services by Finnish financial market participants is largely dependent on foreign service providers and therefore the regulators want financial firms to prepare for circumstances in which foreign services are unavailable for an extended period of time. Everyone must therefore submit survival plans to the regulator by 31 December.

The Ministry of Finance is rewriting the existing Regulation 23/2018 to make it less ambiguous and therefore more useful in preparing the financial markets to maintain the information systems and data warehouses that they need to keep operations in Finland going if service is interrupted. The Government hopes that the regulation will guarantee the continuity of vital financial market services, even when information systems or services are impaired. Firms' legal requirements to make such preparations stem from the Credit Institutions Act, the Payment Institutions Act, the Investment Services Act and the Investment Funds Act.

To this end, the FIN-FSA is asking every firm that is obliged by these Acts to draw up a plan, specific to itself, that shows how it intends to keep crucial services to customers going in circumstances where foreign service provision is completely unavailable. Credit institutions, payment institutions, fund management companies and investment firms are all included, along with the stock exchange and the Finnish Central Securities Depositary.

Services to be secured

The services to be secured are defined in 23/2018. Credit institutions and payment institutions must keep up:

  • a service for making a cash deposit on a payment account or withdrawing cash from a payment account (and related activities);
  • the ability to execute payment transactions as credit transfers, transfers of funds on the payment accounts of service providers, direct debits or through payment cards;
  • the ability to issue payment instruments.
  • acceptance and processing of payment transaction that result in transfers of funds to payees;
  • activities to execute credit transfers onto Finnish accounts at other credit institutions or payment institutions and to receive credit transfers from such accounts.

Investment firms must still be able to:

  • receive and transmit orders on financial instruments;
  • execute orders on financial instruments on behalf of clients;
  • manage financial instruments under client-specific contracts in which decision-making power has in full or in part been granted to the contractor (asset management);
  • arrange the issue or sale of financial instruments by giving a subscription or purchase commitment (underwriting of issue);
  • arrange the issue or sale of financial instruments without giving a subscription or purchase commitment (arrangement of issue);
  • services related to the underwriting of an issue of securities; and
  • custody and management of financial instruments on behalf of clients.

Fund management companies

Tasks and services are referred to in chapter 9, sections 4 and 5 Mutual Funds Act.

Content of a plan

The entity-specific plan must describe, for example, how to ensured that the payer is able to submit a payment order to its payment service provider and how the payment service provider processes the payment and transfers the payment to the payee's payment service provider and on to the payee's account. As regards card payments, the entire chain covering the payment of a purchase to the payee must be described. With respect to securities business, similar thinking applies: how to ensure the transfer of securities and money from the principal to the receiving end-customer?

The plan must be appropriate for a situation in which no inter-entity or entity-internal payment or securities system, function or data warehouse located abroad is available for months.

If the report includes actions to be taken in the future, their schedule and content must be presented in exact terms.

Firms must submit their "preparedness plans" to the FIN-FSA by 31 December.

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