Powers of the Financial Stability Authority
In addition to implementing the resolution tools, the Financial Stability Authority can take other action wherein it exerts its official authority. For example, it has the right to acquire information, conduct inspections or use its decision-making power in relation to the institutions under its remit. The key powers that it has are described here.
- Moratorium: The Financial Stability Authority may suspend the payment or execution of obligations under a contract entered into by an institution for a maximum period of two banking days. During the period of suspension, none of the services provided by the institution will be available and no deposits may be withdrawn. The interruption must comply with the conditions laid down in the law, when the institution is assessed to be failing or likely to fail (FOLTF) or when a resolution scheme has already been adopted for it.
- Taking control of an institution: The Financial Stability Authority may take control of an institution and exercise all the rights that its owners, shareholders, governing bodies, CEO and other senior management have.
- Remove management and appoint new persons in their place: The Financial Stability Authority may remove the members of an institution’s Board of Directors, Supervisory Board and CEO, and dismiss other members of the management team, and appoint new persons to take their place.
- Make a fit and proper assessment: The Financial Stability Authority can order the Finnish Financial Supervisory Authority to make a fit and proper assessment within the reasonable period that it proposes.
- Powers to demand the provision of a service or function: The Financial Stability Authority may decide that an institution must provide a recipient of its assets or liabilities with the services and functions it needs to run its business efficiently.
- Powers to defer the right to terminate or dissolve an agreement: The Financial Stability Authority may temporarily defer the right of a party to terminate or dissolve an agreement that it has entered into with an institution.
- Restriction on distributions: The Financial Stability Authority may prohibit an institution from distributing more than the Maximum Distributable Amount related to the MREL requirement. Distributions include, for example, the payment of dividends and interest.
Chapter 12 of the (Finnish) Act on the Resolution of Credit Institutions and Investment Firms lays down provisions on the FSA’s powers here described and its other powers.