EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 7 September  2016  
on the role of the Financial Supervisory Authority’s representative o n the E uropean Central 
Bank’s Supervisory Board, and on supervision fees  
(CON/2016/43)  
 
Introduction and legal basis  
On 22 June 2016 the European Central Bank  (ECB) received a request from the Finnish Ministry of 
Finance for an opinion on a draft Government Bill  amending the Law on th e Financial Supervisory 
Authority (hereinafter the ‘draft law on the FIN -FSA’) and the Law on the s upervision fees of the Financial 
Supervisory Authority  (hereinafter the ‘draft law  on supervision fees’ and together with the draft law on the 
FIN-FSA,  the ‘draft  laws’). 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent of Article  2(1) of Council Decision 98/415/EC1, as 
the draft law s relate to the tasks conferred on the ECB concerning policies relating to the prudential 
supervision of credit institutions  and Suomen Pankki . In accordance with the first sentence of 
Article  17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted 
this opinion.  
 
1.  Purpo se of the draft law  
1.1 The draft law  on the FIN -FSA aims to adapt existing legislation to recent changes in the 
supervisory framework, in particular the division of supervisory tasks between the Finnish Financial 
Supervisory Authority (FIN -FSA) and the ECB under the Single Supervisory Mechanism (SSM), 
and to specify the tasks and responsibilities within the FIN -FSA for SSM -related issues .  
1.2 The draft law on the FIN -FSA proposes that the FIN-FSA’s maximum number of Board members 
be increased from five  to six , three of whom will  continue to be appointed based on proposals from  
Suomen Pankki, the Ministry of Finance and the Ministry of Social Affairs and Health, respectively. 
The Parliamentary Supervi sory Council , which  currently  appoint s the two remaining members of 
the Board, will in the future  have the right to appoint three member s of the Board. As noted in the 
motivations for the draft law, the amendment of the Law on the Financial Supervisory Authority  is 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).  
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2 necessary  to ensure that the FIN-FSA’s Board has sufficient expertise to carry out all of its tasks , 
including macroprudential and insurance supervision.  
1.3 The draft law on the FIN-FSA explicitly assigns  to the FIN-FSA’s Board  the task of appoint ing the 
FIN-FSA’s representative on the ECB Supervisory Board,  and his or her alternate in the event of 
the representative’s  absence.  The motivations for the draft laws state that although the FIN-FSA’s 
Board has appoint ed the Director General of the FIN -FSA2 as the FIN -FSA’s representative on the 
ECB Supervisory Board , the Board could,  in principle,  appoint someone else as FIN -FSA’s 
representative.   
1.4 Under the draft law on the FIN -FSA, the FIN -FSA’s representative on  the ECB Supervisory Board 
is required to submit for the FIN -FSA Board’s consideration any matters to be considered by the 
ECB Supervisory Board concerning:  (1) the financing of ECB banking supervision;  (2) supervisory 
decisions or capitalisations relating to the business activities of significant credit institutions; 
(3) regulations and guidelines relating to the activities of significant credit institutions;  
(4) restrictions on the management activities of significant credit institutions;  and (5) matters which 
in other ways have a significant bearing on the activity of the FIN-FSA and which are fundamental 
from a financial market perspective. The FIN-FSA’s representative may handle a  matter  that arises  
at an ECB Supervi sory Board meeting without consulting the FIN -FSA’s Board, if this is necessary 
due to the urgent nature of the mat ter. In such cases , the FIN -FSA’s Board must  be informed of the 
matter ex post . Furthermore, the repr esentative must  make the FIN -FSA’s  Board aware of any 
information obtained that relates to the ECB Supervisory Board’s activities on matters and 
initiatives affecting the development of the financial market and financial legislation3. 
According to the motivations for the draft laws, the reason for  requiring the FIN -FSA’s 
representative on  the ECB Supervisory Board to submit the abovementioned matters for the FIN -
FSA Board’s consideration is not in order for the FIN -FSA’s Board to make a binding decision on 
ECB Supervisory Board matter s, as the FIN -FSA’s Board is not authorised to decide on a matter 
on which the ECB ’s Governing Council decides . The motivations for the draft laws state that this 
provision w ill apply to decisions which concern the FIN -FSA’s supervised entities and to decisions 
which could have a significant impact on the structure of European financial markets or financial 
stability. In this respect, t he motivations for the draft laws clarif y that at least those matters that 
affect credit institutions operating or  based in Finland will be considered significant from the point of 
view of  the FIN -FSA, and that it is necessary to limit  the ECB Supervisory Board matters to be 
submitted for  consideration by the FIN -FSA’s Board , in view of the large number of matters dealt 
with by the ECB Supervisory Board.   
The motivations for the draft laws  acknowledg e that according to Council Regulation (EU) 
No 1024/20134, the members of the ECB Supervisory Board must act independently, objectively 
                                                 
2  The Director General, who is the chief executive officer of the FIN -FSA, is currently appointed for a period of five years 
by the Parliamentary Supervisory Council based on a proposal from the FIN -FSA’s Board. The Director General is not a 
member of the FIN -FSA’s Board.  
3  See Section 10a of the draft law on the FIN -FSA.  
4  Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring tasks on the European Central Bank concerning  
policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63).  
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3 and in the interest of the Union as a whole.  This means that decisions must be taken independently 
of external (political and industry) influences . The motivations for the draft laws also point out that 
the FIN -FSA’s Board is part of the FIN -FSA and not an external body and that the FIN -FSA is 
represented on the ECB Supervisory Board as an organisation.  In addition, t he motivations for the 
draft laws state that the requirement of independence laid down in Council Regulation 
(EU) No 1024/2013 does not prevent the FIN -FSA’s Board from discussing a matter that is pending 
before the ECB Supervisory Board at one of the FIN -FSA Board’s meetings  and, if necessary, 
taking a position on significant matters of principle.  
According to the motivations for the draft l aws, Council Regulation (EU) No 1024/2013 aims to 
ensure the operational independence and objectivity of the SSM and the ECB Supervisory Board 
as a whole, without interfering with the internal organisation of national supervisory authorities, 
such as the status of the person representing the national supervisory authority on the ECB 
Supervisory Board, in the decision- making system of the national s upervisory authority. Council 
Regulation (EU) No 1024/2013 does not include any provisions on the operational organisation or 
internal division of responsibilities of national supervisory authorities . Decisions on the organisation 
and internal responsibilities of national supervisory authorities are left to the sole discretion of each 
Member State. The motivations for the draft laws also argue that the role of the FIN -FSA’s 
representative on the ECB Supe rvisory Board differs from the role of Suomen Pankki ’s Governor 
on the ECB ’s Governing Council. On the basis of  the Treaty , the Governor of Suomen Pankki is 
explicitly  mentioned as being a member of the ECB ’s Governing Council and exercises his  or her 
voting rights on a personal  basis . By contrast , the FIN -FSA is represented as an organisation on 
the ECB Supervisory Board, and the exercise of voting rights is not confined to a specific person 
under Union law.  
1.5 The purpose of the draft Law on supervision fees is to take into account structural changes in the 
Finnish financial market and their impact, inter alia, on the financing of supervis ory activities . The 
fees for branches of credit institutions established in the European economic area are amended by 
introducing higher fees for those branches that are categorised as significant  (with a market share 
of 2- 10 % of deposits)  or very significant  (with a market share of 10 % or more of deposits).  
In addition, fixed supervision fees are increased b y 7 %, while the proportional fees are decreased 
by 5 % in order to achieve a more equitable distribution of  the burden of paying the fees.  These  
changes aim to maintain th e current funding structure, with 95 % of the FIN -FSA’s operating costs 
being funded by supervision fees and the remaining 5 % by Suomen Pankki.  
 
2. Specific observations  
2.1 Appointment of FIN -FSA’s representative on the ECB Supervisory Board  
 The ECB notes  the clarification in the draft law on the FIN -FSA that the FIN -FSA’s Board will 
appoint the FIN -FSA’s representative to the ECB Supervisory Board, and his  or her alternate in the 
event of the absence  of the representative. In this respect, t he ECB point s out that Article 26(1) of 
Council  Regulation  (EU) No 1024/2013 provides that the ECB Supervisory Board must include one 
representative of the national competent authority  (NCA)  in each participating Member State,  which 
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4 includ es one representative of the FIN -FSA. However, t he procedure and conditions for  appoint ing 
the representative of the FIN -FSA to the ECB Supervisory Board remain a matter of  national law.  
2.2 Consideration by FIN -FSA’s Board of ECB Supervisory Board matters  
2.2.1 The ECB notes that pursuant to Section 10a of the draft law on the FIN -FSA, the FIN -FSA’s 
representative on the ECB Supervisory Board must submit for  the FIN -FSA Board ’s consideration 
certain matters to be considered by the ECB Supervisory Board. Furthermore,  the respective 
member of the ECB Supervisory Board may not deal with such matters without the FIN -FSA’s 
Board  first having discussed them , unless the matters concerned are urgent . In this respect, t he 
ECB highlight s Article 19  of Council  Regulation (EU) No 1024/2013,  which provides that t he 
members of the ECB Supervisory Board must act independently and objectively in the interest of 
the Union as a whole and must  neither seek nor take instructions from the institutions or bodies of 
the Union, from any government of a Member State or from any other public or private body.  
The governments of the Member States and any other bodies must respect that independence. 
In addition, Article 26(1) of Council  Regulation (EU) No 1024/2013 states that all members of the 
ECB Supervisory Board must  act in the interest of the Union as a whole5. 
2.2.2  The ECB considers that the principle of independence under Article 19 of Council  Regulation  
(EU) No 1024/2013 prohibits , inter alia , any national body, including the FIN -FSA’s Board, from 
giving instructions to members of the ECB Supervisory Board. The draft laws are  not clear on 
whether , after having considered any matter  that the FIN -FSA’s representative on the ECB 
Supervisory Board submits for its consideration,  the FIN -FSA’s Board might give instructions to the 
FIN-FSA’s representative on the ECB Supervisory Board . However, the ECB notes that the 
proposed provisions could be interpreted in such a way. In any case,  a member of the ECB 
Supervisory Board would not be able to act independently if he or she had to bring, prior to any  
discussion at the ECB Supervisory Board, certain matters before a decision- making body of the 
NCA , if that decision -making body were allowed, or required, to take a position on th ose matters. 
Under such circumstances, the representative on the ECB Supervi sory Board m ight be reluctant to 
deviate from the position of the decision -making body of the NCA  by follow ing his or her own 
assessment. Thus, national legislative provisions  should not aim to enable the FIN -FSA’s Board to 
unduly influence the person appointed by it  as a representative on the ECB Supervisory Board in a 
manner that would breach the ECB Supervisory Board representative’s independence in any way .  
2.2.3 The ECB also notes  that, based on the motivations for the draft l aws, the reason for  requiring the 
FIN-FSA’s representative o n the ECB Supervisory Board to submit certain specified matters for the 
FIN-FSA Board’s consideration is not in  order for  the FIN -FSA’s Board to make a binding decision 
on ECB Supervisory Board matters, as the FIN -FSA’s Board is not authori sed to decide on a 
matter on which the ECB ’s Governing Council decides .  
 However , as previously noted,  this provision is designed to ensure that the FIN -FSA’s Board may 
exercise substantial influence over the FIN -FSA’s representative on  the ECB Supervisory Board. 
                                                 
5  See also Article 13b.1 of Decision ECB/2004/2 of the European Central Bank of 19 February 2004 adopting the Rules of  
Procedure of the European Central Bank (OJ L 80, 18.3.2004, p.33) and Article 4 of the Code of Conduct for the 
Members of the Supervisory Board of the European Central Bank (OJ C 93, 20.3.2015, p. 2).  
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5 In this regard, the ECB emphasises that when the ECB is the competent authority for a supervisory 
decision, any national law provisions concernin g the decision- making of the NCA  may not influence 
the ECB’s decis ion-making . The ECB Supervisory Board is an internal  body of the ECB . Although 
an NCA appoints a representative to the ECB Supervisory Board,  that representative should not be 
subject to any national law provisions on the governance or decision- making of the NCA  when it 
comes to his  or her actions as a member of the ECB Supervisory Board to the extent that such 
provisions are incompatible with the status of the representative on the ECB Supervisory Board as 
defined by Union law. Council Regulation (EU) No 1024/2013 does not assign the role of the NCA ’s 
representative to a specific person,  but allows the NCA  to freely appoint its representative. This fact  
has no bearing on the conclusion that, once the representative has been appointed , he or she 
should not be subject to national law requirements which could  hinder  his or her independence and 
objectivity whilst acting in his or her capacity as a representative on the ECB Supervisory Board, 
which is an internal ECB body . 
2.2.4 Because Council Regulation (EU) No 1024/2013 specifically requires that the members of the ECB 
Supervisory Board act independently, the application of any national law provisions conflicting with 
that independence requirement sh ould be considered to be inconsistent with Union law. 
Article  19 of Council  Regulation (EU) No 1024/2013 requires that the members of the ECB 
Supervisory Board ‘shall act independently ’. It should be emphasised that this provision does not 
specify any exceptions to this independence requirement. The requirement applies to all members 
of the ECB Supervisory Board, including those appointed by the NCAs . By definition,  a member of 
the ECB Supervisory Board could not ‘act independently ’ if the member is unduly influenced by a 
decision -making body of the NCA , or is  unable to take a position in ECB Supervisory Board 
meetings on an issue without the approval of a decision- making body of the NCA . This does not 
exclude the possibility for a member of the ECB Supervisory Board to seek , where appropriate, at 
his or her own initiative and discretion, the views of others when preparing for discussions in ECB 
Supervisory Board meetings . 
2.2.5 It should also be noted that the planning and execution of the tasks conferred on the ECB under 
Council  Regulation (EU) No 1024/2013 must  be fully undertaken by the ECB Supervisory Board, 
which prepares the draft decisions on supervisory issues to be sent to the ECB ’s Governing 
Council for approval. In this respect, the ECB Supervisory Board is not intended to function as an  
inter-governmental body , but rather as an i nternal body of a Union institution,  whose members are 
required to act objectively in the interest of the Union as a whole. In this context , it should be noted 
that the members of the FIN -FSA’s Board are not subject to a similar requirement to act objectively 
in the interest of the Union as a whole. In addition, the position of a member of  the FIN-FSA’s 
Board is only a part -time position and the members of the FIN -FSA’s  Board may have other full -
time positions, for example,  in government offices. Any undue influence on the NCA ’s 
representative on the ECB Supervisory Board by an internal body of the NCA  would  erode the 
requirement under Council  Regulation (EU) No 1024/2013 that the ECB Supervisory Board 
members must  act independently and objectively in the interest of the Union as a whole, as this 
could mean that supervision would be driven by national rather than European interests.   
ECB -PUBLIC  
6 2.2.6  Further more, the ECB considers that the nationa l law provisions requiring the NCA ’s representative 
on the ECB Supervisory Board to submit matter s for consideration by an internal body of the NCA  
would probably constitute an obstacle to the effective discharge of the ECB Supervisory Board’s 
responsibili ties, thereby undermining the effective performance by the ECB of its supervisory tasks . 
The members of the ECB Supervisory Board must, where necessary, be able to take swift 
positions on the contents of the draft decisions prepared or adjust the procedures for processing 
matters without having to obtain verification or confirmation of the position of a decision- making 
body in the NCA .  
2.2.7 In the light of the above , the ECB  considers that the provisions of the draft law  on the FIN -FSA 
impos ing an obligation on the FIN-FSA’s representative on  the ECB Supervisory Board to submit 
ECB Supervisory Board matters for the consideration of the FIN -FSA Board should be removed.   
2.3 Provision of information regarding ECB Supervisory Board matters to FIN -FSA Board  
2.3.1  The ECB notes that the motivations for the draft l aws argue that the FIN-FSA’s Board cannot fulfil 
its legal,  governance and other tasks unless it receives suffic ient advance information on matters to 
be discussed at meetings of the ECB  Supervisory Board. In this respect, the ECB understands 
that, based on existing legislat ion, the FIN -FSA’s Board decides, among other things, on the overall 
strategy of the FIN -FSA, sets specific operational objectives, directs and supervises compliance 
with the strategy and achievement of the objectives, and reports to the Parliamentary Supervisory 
Council on the achievement of the FIN -FSA’s objectives. The ECB understands that the FIN -FSA’s 
Board also decides on the principles to be observed by the FIN -FSA in international cooperation, is 
responsible for taking certain supervisory decisions,  such as decisions on administrative sanctions, 
and considers certain decisions within the Director -General’s competence. The ECB understands 
that the FIN -FSA Board’s responsibilities related to the administration of the FIN -FSA include , 
among other  things,  considering the annual budget of the FIN -FSA and submitting it for 
confirmation by Suomen Pankki’s  Board.  
2.3.2 Article 27(1) of Council  Regulation (EU) No 1024/2013 makes the members of the Supervisory 
Board subject to the professional secrecy requirements set out in Article 37 of the Statute of the 
European System of Central Banks  and of the E uropean Central Bank (hereinafter the ‘Statute of 
the ESCB’)  and in the relevant acts of Union law6. Members of the ECB Supervisory Board and 
other partic ipants in ECB Supervisory Board meetings are required to take all necessary measures 
to ensure that the professional secrecy obligations in Article 37 of the Statute of the ESCB  are 
respected by persons having access to the members’ information7. In additi on, it should be noted 
that documents drawn up by the ECB Supervisory Board are ECB documents , and therefore they 
must be classified and handled in accordance with Decision ECB/2004/28. In particular, the 
proceedings of the ECB Supervisory Board are confidential. Consequently,  without prejudice to the 
duty of cooperation in good faith between the ECB and the NCAs  and the obligation to exchange 
information provided by Article 6(2) of Council Regulation (EU) No 1024/2013 the SSM Regulation, 
                                                 
6  See also Article 23a of Decision ECB/2004/2.  
7  See Article 14.2 of the Code of Conduct for the Members of the Supervisory Board of the European Central Bank.  
8  See Article 23a in conjunction with Article 23.3 of Decision ECB/2004/2.   
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7 any sharing of information by members of the ECB Supervisory Board must  strictly comply with  
professional secrecy obligations  and the ECB’s confidentiality rules. Therefore, the sharing of 
information by a member of the ECB Supervisory Board when seeking the views of others as 
referred to by para 2.2.4 shall be subject to professional secrecy obligations of those other 
persons.  However, in this respect , national law imposing an obligation on the ECB Supervisory 
Board members to share ECB  documents with any  person, including the NCAs , is incompatible 
with the ECB’s independence in deciding how to handle ECB documents , including documents of 
the ECB Supervisory Board . 
2.3.3 In addition, the ECB considers that  a requirement to provide information to the FIN -FSA’s  Board 
before the ECB Supervisory Board considers a particular  matter w ould interfere with the 
independence of FIN-FSA’s representative o n the ECB Supervisory Board,  making the 
representative susceptible to attempts to unduly influence him or her in connection with his  or her 
duties as  a member  of the ECB Supervisory Board.  
2.4 Supervision fees  
According to the draft law on supervision fees, the future funding of the FIN -FSA would be 
guaranteed in a situation where one or more significant credit institution operating as a subsidiary  
might be transformed into a branch. However, the motivations for the draft l aws recognise that in 
such a s ituation,  the FIN -FSA would have to levy supervision fees almost up to the maximum 
amount permitted by law. In this regard, the ECB would like to point out that, when considering 
FIN-FSA’s resources, the SSM’s need for NCA staff on joint supervisory teams and inspection 
teams and the more intense supervision expected for less significant institutions, should also be 
taken into account.  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 7 September 2016.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI