Danish pension fund PFA has received 12 official orders to correct its procedures from the Financial Supervisory Authority (Finanstilsynet, FSA), including a warning that the many key projects it had on the go could pose a risk to its business model if they were not implemented successfully.
In a statement on Wednesday, the FSA said it had inspected the company between October and December 2020, addressing areas including management and organisation, investments, risk management. solvency, insurance business and outsourcing.
The watchdog said PFA Pension had initiated several large projects of great importance to the business, for which the firm had set up associated governance, including anchoring them in top management.
“The Danish FSA assessed that as a whole, the projects constituted a significant draw on PFA Pension’s resources, and that the projects posed a risk to the company’s business model if they were not implemented successfully,” it warned in the inspection report.
In all, the authority issued PFA Pension with 12 official orders (påbud or påtale) to correct aspects of the way it managed the business.
On the topic of policies and guidelines, the FSA said it had instructed PFA to ensure that the value of its registered assets at all times at least corresponded to the technical provisions, and told the company to make sure relevant guidelines and business procedures contributed to that in a consistent and clear manner.
“In addition, the company has been instructed to ensure that a disproportionately large sector or country exposure cannot arise for the market-rate products offered,” the authority said.
The Danish FSA also said it had found that in several of the minutes taken from meetings, it appeared that there had been discussions on a point at PFA Holding and PFA Pension’s board meetings that was not refected in those minutes. It instructed PFA to ensure minutes always reflected discussions at meetings.
The company was also reprimanded for its compliance plan failing to take into account all relevant areas.
As a further point, the Danish FSA said it found that deadlines for established breaches of the rules had been postponed without it being clear from the compliance report when the deadlines had been moved and how many times they had been moved.
PFA commented on the batch of orders it had received from the FSA, saying it would live up to the authority’s requirements and had already gone a significant way towards remedying the alleged conditions.
The firm’s acting chief executive officer Mads Kaagaard said: “We have had a constructive dialogue with the Danish Financial Supervisory Authority, and it is clear to us in which areas they want adjustments.”
PFA said the conditions the FSA wanted were now already in place, or in the process of being changed.
“It is important to us that we live up to the legislation and that there is trust in PFA with both customers and authorities. That’s why we’ve had full focus on following up on the Danish FSA’s inspection,” Kaagaard said.