Finnish Financial Regulator Updates Penalty Framework With Greater Credit for Early Cooperation

Key Takeaways

• Cooperation Gets More Weight: FIN-FSA has clarified how cooperation with the authority can affect the size of penalty payments.
• Earlier Admissions Can Matter More: The earlier and more comprehensively a responsible person explains a violation or omission, the greater the potential reduction in the penalty payment.
• Existing Practice Gets More Precision: The updated principles reflect established FIN-FSA practices and refine principles last published in 2022.

Deep Dive

Finland’s Financial Supervisory Authority (FIN-FSA) has published updated principles for determining the size of penalty payments and administrative fines. The principles themselves are not new. The authority published an earlier version in 2022, and the latest changes largely put greater precision around practices that have since become established.

The important revision concerns cooperation with the regulator, and particularly what happens when the person responsible admits a violation or omission. FIN-FSA has now made its position more explicit. The earlier that person explains what happened, and the more significant and comprehensive the explanation, the greater the potential reduction in the penalty payment. Waiting matters, but so does holding something back.

There is a pretty useful piece of regulatory logic buried in that wording. Cooperation is not treated as a box to be checked after the facts have already been dragged into daylight. FIN-FSA is looking at its timing and substance. An early and thorough account can carry more weight than an admission that arrives after much of the investigative work has already been done.

That is, perhaps, the biggest change from the principles published four years ago. FIN-FSA has also specified other principles it considers when determining the size of penalties, although its October 1 release does not describe those revisions in detail.

The remainder is more mechanical. Other changes are technical and stem mainly from amendments to the Act on the Financial Supervisory Authority. There is also a reason these principles are public in the first place. FIN-FSA said their publication is based on the detailed rationale accompanying Section 41 of the Act on the Financial Supervisory Authority, contained in Government Proposal 39/2014.

What firms are getting, then, is not just a new enforcement philosophy, but a clearer account of the one already being used, and that can be just as consequential. Once a potential violation is on FIN-FSA’s desk, the regulator has now said more plainly that cooperation is measured not simply by whether it eventually arrives, but by how early, how substantially and how completely it does.

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