Opinion of the European Central Bank of 7 September 2016 on the role of the Financial Supervisory Authority’s representative on the European Central Bank’s Supervisory Board, and on supervision fees (CON/2016/43)
Date: 2016-09-07
Institutions: European Central Bank
Subjects: EU banking union, European Central Bank, Finland, appointment of staff, banking supervision, financial supervision, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 7 September 2016 

on the role of the Financial Supervisory Authority’s representative on the European 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  the  Financial  Supervisory 

Authority (hereinafter the ‘draft law on the FIN-FSA’) and the Law on the supervision 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/EC 1, as 

the  draft  laws  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.  

Purpose 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  Supervisory  Council,  which  currently  appoints  the  two  remaining  members  of 

the Board, will in the future have the right to appoint three members 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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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 appointing 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 appointed 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 Supervisory Board meeting without consulting the FIN-FSA’s Board, if this is necessary 

due to the urgent nature of the matter. In such cases, the FIN-FSA’s Board must be informed of the 

matter  ex  post.  Furthermore,  the  representative  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 legislation 3. 

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 matters, 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 will 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,  the  motivations  for  the  draft  laws  clarify  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  acknowledge  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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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, the 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  laws,  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  supervisory  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 Supervisory  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 supervisory 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 by 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 the 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, the ECB points 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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includes one representative of the FIN-FSA. However, the procedure and conditions for appointing 

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,  the 

ECB  highlights  Article  19  of  Council  Regulation  (EU)  No  1024/2013,  which  provides  that  the 

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 whole 5. 

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 those matters. 

Under such circumstances, the representative on the ECB Supervisory Board might be reluctant to 

deviate  from  the  position  of  the  decision-making  body  of  the  NCA  by  following  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 laws, the reason for requiring the 

FIN-FSA’s representative on 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  authorised  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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In this regard, the ECB emphasises that when the ECB is the competent authority for a supervisory 

decision, any national law provisions concerning the decision-making of the NCA may not influence 

the ECB’s decision-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  should  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 internal 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.  

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2.2.6  Furthermore, the ECB considers that the national law provisions requiring the NCA’s representative 

on the ECB Supervisory Board to submit matters for consideration by an internal body of the NCA 

would  probably  constitute  an  obstacle  to  the  effective  discharge  of  the  ECB  Supervisory  Board’s 

responsibilities, 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 

imposing 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 laws argue that the FIN-FSA’s Board cannot fulfil 

its legal, governance and other tasks unless it receives sufficient advance information on matters to 

be  discussed  at  meetings  of  the  ECB  Supervisory  Board.  In  this  respect,  the  ECB  understands 

that, based on existing legislation, 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 European Central Bank (hereinafter the ‘Statute of 
the  ESCB’)  and  in  the  relevant  acts  of  Union  law 6.  Members  of  the  ECB  Supervisory  Board  and 

other participants 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’ information 7. In addition, 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/2004/2 8.  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 1024/2013the 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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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  would  interfere  with  the 

independence  of  FIN-FSA’s  representative  on 

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 laws recognise that in 

such  a  situation,  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 

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