Finland’s Financial Regulator Backs Simpler Rules While Warning Against Weaker Safeguards

Key Takeaways

• Regulator Supports Targeted Simplification: Finland’s Financial Supervisory Authority supports removing overlapping requirements and reducing administrative burdens where changes do not weaken solvency, risk resilience or financial stability.
• Resilience Remains the Boundary: The authority said regulatory easing should be based on careful impact assessments and should preserve the financial sector’s ability to withstand economic and market disruptions.
• New Supervisory Objective Needs Clear Limits: A proposed secondary objective covering competition, financing and sustainable economic growth would need to be clearly reconciled with the authority’s existing supervisory responsibilities.
• Housing Rules Have Already Been Eased: Changes earlier in 2026 extended maximum housing-loan repayment periods and raised the housing loan cap as part of an effort to make housing finance more flexible.

Deep Dive

Finland’s financial regulator sees room to make the rulebook simpler. What it does not see is a reason to surrender the resilience that has allowed the country’s financial sector to withstand years of economic and market uncertainty.

The Financial Supervisory Authority said that regulation should be clarified and, where appropriate, simplified, lending its support to a debate already underway in Finland and across the European Union. Overlapping requirements can be removed and administrative burdens reduced, the authority said, provided those changes do not weaken the solvency or risk resilience of financial institutions or threaten the stability of the financial system.

That qualification sits at the heart of the regulator’s position. Finland enters the debate with a financial sector the authority describes as strong and solvent, supported over time by risk-based supervision and macroprudential measures intended to help financial institutions withstand economic and market disruptions. Simplification, in its view, makes sense where rules impose costs without providing corresponding protection. The harder question is deciding where that line lies.

“The development of regulation and the strengthening of competitiveness are legitimate objectives,” Financial Supervisory Authority Director Tero Kurenmaa said. “It is essential to ensure that any easing is targeted at areas where it does not weaken the solvency or risk resilience of financial sector entities, or the stability of the financial system.”

The argument comes as the European Union searches for ways to strengthen the competitiveness of its banking sector, improve the transmission of financing and support economic growth. The Finnish regulator does not accept the premise that those ambitions require a choice between competitiveness and financial stability. It sees the two as mutually supporting: resilience strengthens confidence in Finnish institutions, helps preserve access to financing and gives domestic and international market participants a more predictable environment in which to operate.

There is room within that framework to reconsider existing requirements. The authority said regulation should be reviewed regularly as the operating environment changes, and that removing overlaps and reducing administrative burdens can improve market functioning and help financing reach the real economy. But it wants those changes made on the strength of careful impact assessments, rather than from a general assumption that less regulation necessarily produces a more competitive financial sector.

The same concern runs through the European discussion over a savings and investments union. The authority said such a project, if implemented, could improve the competitiveness of European capital markets while expanding the opportunities available to Finnish companies and investors to raise financing and make investments through those markets.

A Broader Role for the Supervisor

The debate has also reached the mandate of the Finnish regulator itself. A new secondary objective has been proposed that would require the authority to promote competition in financial markets, the transmission of financing and sustainable economic growth. The Financial Supervisory Authority has not opposed such an objective, but it wants the boundaries drawn clearly.

If the mandate is introduced, the authority said policymakers should define how those objectives relate to its statutory supervisory task and its responsibilities for safeguarding confidence in financial markets and financial stability.

That question becomes important precisely when the objectives do not point neatly in the same direction. Measures intended to encourage financing or competition can carry prudential consequences, and the regulator’s position is that its responsibilities should be clear before it is asked to weigh one against another.

Housing Finance Offers an Early Test

Finland does not have to look far for an example of what regulatory easing looks like in practice. Changes to housing finance requirements earlier this year extended the maximum repayment period for housing loans and raised the housing loan cap, among other measures intended to make housing finance more flexible, support housing transactions and construction, and make it easier to move house.

The changes also increased the scope for taking economic conditions into account, particularly in rules governing the maximum loan-to-value ratio and housing company loans during the construction phase. For the Financial Supervisory Authority, the next task is to watch what those changes produce when considered together.

Household indebtedness has declined in Finland in recent years, but the authority said it remains relatively high by European standards. That leaves little room for complacency. Greater flexibility in housing finance may serve the objectives behind the reforms, but the regulator warned that changes should not be allowed to build vulnerabilities that become apparent only later.

“Well-targeted regulation supports both stability and competitiveness,” said Samu Kurri, a head of department at the Financial Supervisory Authority. “Easing regulation is justified when the effects have been carefully assessed and the change does not jeopardise the functioning of the financial system.”

The regulator’s position is therefore more accommodating than a defense of the existing rulebook and more cautious than a broad call for deregulation. It accepts that rules can become duplicative, burdensome or poorly suited to the markets they govern, and that correcting those problems can support financing and economic activity.

What it is asking policymakers to preserve is the capacity of the financial system to absorb trouble when conditions deteriorate. Finland has spent years reinforcing that capacity through supervision and macroprudential policy. The authority sees no contradiction in making regulation clearer and more proportionate while protecting those gains. Its warning is simply that the second part cannot be treated as incidental to the first.

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