Denmark’s FSA has found fault with some of PensionDanmark’s reporting and descriptions of processes, and handed out two official orders to correct things – but has also given the thumbs up to the labour-market pension fund for its risk management.
In a statement released today regarding an inspection it carried out in December 2021, the FSA (Finanstilsynet) said the pension fund’s investment operation was managed according to integrated, described processes.
“However, certain aspects are not clearly described in the company’s management document, which makes it difficult for the board of directors to relate to key parts of the processes and to follow up on these to a sufficient extent,” the FSA said.
“At the same time, the written reporting is not sufficiently comprehensive in all respects,” it added.
Because of these failings, the watchdog said it was instructing the company – via an official order (påbud) – to clarify its risk profile and the overall strategic objectives in the investment area, as well as to establish a verifiable framework for individual asset classes with enough identification and delimitation of the desired risks and unambiguously determining their size.
“Furthermore, the Danish Financial Supervisory Authority is ordering the company to ensure that reporting is received that is adequate for the board of directors’ work, and includes the utilisation over time of all the frameworks and requirements set by the board,” the FSA said.
However, the watchdog also went on to acknowledge that the December 2021 probe had shown PensionDanmark to have strengthened its risk management operation since the previous inspection.
“The organisation in the area of risk management has not given rise to any comments,” it said.
Asked for a comment on the FSA’s statement, PensionDanmark said the supervisory authority had conducted an inspection in December, with a focus on the investment area and the organisation of the risk management operation and its connection with the investment operation.
“On the basis of the inspection, we have received two orders, which we of course take note of,” the pension fund said. “The Danish Financial Supervisory Authority also stated during the inspection that the organisation of the risk management area has been strengthened,” it said.
A fortnight ago, Denmark’s largest commercial pension fund PFA was given 12 official orders to correct its procedures from the FSA.
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