DEN FSA issued report on the Executive Order for Financial Institutions, etc.
Post discussion with representatives of the financial sector re contents of the order.
Collaboration created greater common understanding, proposals for changes to order.
Overview
The sector expressed several times the order is too extensive, detailed and restrictive.
In addition, believes order distorts division of labor between executive board - board.
Thus, DEN FSA, Finance Denmark, Insurance & Pensions, Local Banking Institutions and Fund Brokers' Association had dialogue re which specific requirements present challenges in day-to-day work with the cited executive order.
Work resulted in a better mutual understanding and number of proposals for changes.
Key Aspects
Dialogue started in fall 2022, FSA cooperation with parties in sector was very fruitful.
Very beneficial to get input from sector and to have mutual dialogue about how to apply requirements of the law and wishes of the sector to meet as best as possible.
Sector raised specific proposals for changes and factual arguments for clarifications.
Based on good dialogue with sector, sensible argumentation and factual considerations presented, DEN FSA is now ready to make some changes to the executive order.
Amendments, which are now being sent for consultation include, inter alia, clarification of division of labor board of directors and executive board in Appendix 4 on liquidity.
Also clarification of board of directors' and board of directors' role in continuously assessing company's policies and guidelines in section 5.
Order lays down rules on management, control of banks, mortgage credit entities, etc.
The management executive order was introduced after financial crisis to create greater clarity re requirements in area, as Financial Business Act only has very general requirements for management and governance.
Consultation
Sent draft executive order amending executive order on management and governance in financial institutions, etc. for consultation.
With amendment order, changes are proposed which should facilitate work of firms' boards and clarify certain requirements in annex to the management order.
These changes arise from discussions between DEFSA and the industry in the working group on the executive order for financial institutions etc.
Also proposed to change scope of application of executive order so investment management companies exempted from number of provisions not relevant to them.
Also Credit Union of Municipalities and Regions in Denmark is covered by it in future.
Proposes to repeal Annex 5 of Executive Order on IT strategy, IT risk management policy, IT security policy, as requirements in this annex replaced by DORA.
Effectiveness
DEN FSA must receive comments on draft order by Apr. 30, 2024 at the latest.
Jun. 2024 Amended Executive Order
On Jun. 28, 2024, DEN GVT published executive order BEK 854 of Jun. 25, 2024 amending executive order BEK 1103 of Jun. 30, 2022 on management of banks.
Executive order enters into force on Jul. 1, 2024, cf. subsection (2); section 1, nos 5, 7 and 9 enter into force on Oct. 18, 2024.
Regulators
DEN FSA
Entity Types
Bank; Corp; CU; Inv Co; MG Orig
Reference
PR, 6/28/2024; Ord BEK 854, 6/25/2024; CP, Rp, PR, 4/2/2024; Financial Institutions Order; Financial Business Act
