Mortgage Credit Bank Operations Under the FIN-FSA’s Spotlight│Capital, Funding & Risk Series, Part I   

Authors: Hanna Lindberg, Rosa Narvio Read time: 2 min

This year, the Finnish Financial Supervisory Authority (the “FIN-FSA”) has examined compliance with the provisions governing mortgage credit bank operations among the mortgage credit banks and credit institutions pursuing mortgage credit bank operations under its supervision.

According to a thematic review published by the FIN-FSA on 13 October 2026, several shortcomings were identified in both operational practices and governance arrangements, based on information provided by the institutions themselves.

Need for Clear Guidance by the Supervisory Authority

In our view, the identified shortcomings also reflect the complexity of the regulatory framework governing mortgage credit bank operations and covered bonds. This observation is supported by the ongoing reform of Finnish credit institutions legislation, which has identified several interpretative challenges relating to the practical application of the national mortgage credit bank framework, including the valuation of assets securing mortgage-backed loans, intermediary loan models, and certain aspects of legislative terminology.

More generally, the findings of the thematic review underline the importance of clear guidance by the supervisory authority. Equally important is an open and constructive dialogue between supervised institutions and the supervisory authority to promote a shared understanding of regulatory expectations and the practical application of the relevant regulations. In this respect, the proposed amendments to the Finnish mortgage credit bank framework may help address some of the interpretative and practical challenges identified in the application of the current framework. While the proposed amendments are a welcome measure, continued clarification at both national and EU level would further support a consistent and predictable application of the framework.

Follow-Up Measures to Be Expected

Looking ahead, the findings of the thematic review are likely to shape both supervisory practice and regulatory developments. In its supervision release, the FIN-FSA indicated that it will take the results of the thematic review into account in its future supervisory work. The institutions covered by the review can also expect follow-up measures, including institution-specific feedback and requirements to address the shortcomings identified during the assessment. In parallel, the submission of the government proposal to Parliament this week marks another incremental step in the ongoing development of the Finnish mortgage credit bank framework.

Hannes Snellman regularly advises clients on matters related to banking regulation, including the regulation and issuance of covered bonds, and we closely monitor related legislative developments. If you have any questions or would like to discuss these topics in more detail, please contact our Financial Services Regulation Team.