FINLAND Law and Practice Contributed by: Olli Kiuru, Mia Rintasalo and Essi Hietaoja, Waselius
Banking Authority (EBA), the European Insur - ance and Occupational Pensions Authority (EIOPA) and the European Securities and Mar - kets Authority (ESMA), which, together with the FIN-FSA, provide micro-prudential supervision. Whilst the ongoing supervision of financial institutions remains with the national supervi - sory authorities, the jurisdiction of the ESAs is enforced through level 2 or level 3 measures. Pursuant to Articles 10 and 15 of ESA Regulation (EU) No 1095/2010, the ESAs have the authority to develop level 2 measures by means of draft regulatory technical standards (RTS) and imple - menting technical standards (ITS). The draft RTS and ITS can be submitted to the Commission by the ESAs upon the approval of the board of supervisors of the respective ESA by way of a qualified majority. In accordance with Article 16 of the ESA Regula - tions, level 3 measures consist of guidelines and recommendations addressed to the competent authorities and financial institutions or financial market players by the ESAs. Similar to RTS and ITS, guidelines are to be approved by the board of supervisors of the respective ESA by way of a qualified majority. According to Article 16(3) of the ESA Regula - tions, competent national authorities and finan - cial institutions or financial market players must make every effort to comply with the guidelines. Both the guidelines and the recommendations are to be applied on a comply-or-explain basis, meaning that failure to adhere to said recom - mendation/guideline requires notifying the respective ESA and providing an explanation for non-compliance within two months of the issu - ance of the guideline or recommendation.
Traditionally, Finland has implemented these EU guidelines quite effectively and to their full extent. The practical implementation is often done by a simple local guideline, where a ref - erence is made to an EU-level guideline. This method gives the foreign fintech companies more comfort since they can rely on the fact that Finland has implemented the EU-level guidelines correctly and without gold plating. 2.7 No-Action Letters Generally, Finnish regulators do not issue no- action letters. They provide guidance to finan - cial market participants seeking clarity on how regulations apply to specific situations or busi - ness models, but these responses are usually non-binding. See also 2.5 Regulatory Sandbox . 2.8 Outsourcing of Regulated Functions Regulated functions can be outsourced subject to certain conditions being satisfied. The pro - visions on outsourcing regulated functions are stipulated in the Regulations and guidelines 1/2012 issued by the FIN-FSA and the EBA Guidelines on outsourcing arrangements. Investment Services Investment firms, credit institutions and fund management companies may outsource their authorised investment services only to enti - ties that are licensed to engage in the practice of investment services. With regard to credit institutions and fund management companies, critical functions may only be outsourced where doing so does not materially interfere with risk management, internal supervision or the func - tioning of business operations. Payment Institutions Similar to institutions offering investment servic - es, payment institutions may outsource substan - tial functions of their payment services where
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