How Norway’s Financial Regulator Works: NSSMC Explores International Experience in Capital Market Supervision

Two training webinars were held with representatives of Finanstilsynet, the Financial Supervisory Authority of Norway. The sessions covered how Norway oversees financial institutions, reviews company reporting, protects investors’ rights and cooperates with regulators in other countries.

How do you decide which financial institution to inspect first? How do you spot potential violations early? And how do you ensure that financial institutions treat their clients responsibly?

These questions framed the discussion and set the stage for a closer look at the Norwegian regulator’s practices.

How inspection targets are identified

One of the approaches used by Finanstilsynet is risk assessment of financial institutions. To this end, the regulator analyses the nature of each company’s business, its financial performance, changes in its operations, the results of previous inspections and information on possible violations.

Account is taken not only of official reporting, but also of client complaints, reports from employees and information from other sources.
Based on this data, the regulator determines which institutions require closer attention and where inspections are most needed. Part of this process is automated, but final decisions also draw on the professional judgement of specialists.

Oversight of financial reporting and audit quality

Particular attention was paid to the review of companies’ financial statements and the work of auditors.

Representatives of Finanstilsynet explained how they verify the reliability of financial reporting, the independence of auditors and the quality of audits. The regulator assesses not only the final output of auditors’ work, but also how their practice is organised, whether they comply with professional standards and whether they have adequate internal quality control procedures in place.

Depending on the severity of the shortcomings identified, inspections may result in recommendations for remediation or in enforcement measures.

Сonsumer complaints help uncover systemic problems

Another topic of the webinars was the protection of consumers of financial services.

In Norway, client complaints are treated not merely as individual cases, but as a source of information for the regulator. When similar complaints come in from different consumers, this may point to a systemic problem in how a financial institution operates.

During inspections, the regulator examines how institutions record and handle complaints, whether they meet response deadlines, whether they explain the outcome to clients and whether they take steps to correct errors.

Joint supervision of Europe’s financial markets

Participants were also introduced to the European MISP initiative, which envisages further integration of EU capital markets, simpler cross-border investment and a stronger role for the European Securities and Markets Authority (ESMA).

In addition, the Norwegian side shared its experience of cooperation between regulators from different countries. Such cooperation involves joint supervision of financial groups, information sharing and the alignment of supervisory priorities. This is particularly important for companies operating in several countries at once.

International experience for the development of Ukraine’s capital market

Norway’s experience shows how a combination of risk assessment, ongoing monitoring, consumer complaint handling and international cooperation helps a regulator carry out its mandate more effectively.

Learning about such practices makes it possible to study the approaches of other countries and take them into account as regulation and supervision of Ukraine’s capital market continue to improve.