Supervisory activities

Hanfa is a regulatory and supervisory body whose competence covers the supervision of the financial market, financial services, and legal and natural persons providing those services.

As part of its daily activities, Hanfa carries out on-site and off-site examinations of more than 1,000 supervised entities, verifying whether they operate in compliance with legal regulations and other relevant rules, internal acts and rules of profession.

 Macroprudential supervision

Hanfa conducts regular macroeconomic stress tests of the financial services sector in order to assess the impact of potential shocks on the financial system.

The simulation of stressed conditions in the macroeconomic environment and financial markets tests the capacity of the financial services sector to absorb potential shocks. Stress testing is an important macroprudental tool because it enables the regulator to enhance, within its powers, the segments of the system that turn out to be vulnerable, thereby preventing or mitigating the consequences that could occur due to the materialisation of a systemic risk.

While in the case of credit institutions the methodology for determining systemically important institutions is regulated in detail, there is no similar legal framework for the sector of financial services. However, a number of international institutions continuously emphasise the importance of conducting stress testing and issue methodological guidelines for its development. Therefore, Hanfa continuously develops new macroprudential tools for systemic risk identification and management, including the development of a methodology for the assessment of systemically important institutions in the sector of financial services.

Hanfa implements microprudential and macroprudential policies on an on-going basis, regularly reporting on them, and cooperates intensively with both domestic and European macroprudential policy makers.

Microprudential supervision

Hanfa carries out its supervisory activities on-site, by visiting the premises of a company, or off-site, by collecting the documentation and required reports, and analysing the reports submitted by supervised entities to Hanfa.

Furthermore, supervision can be full-scope, planned within the annual or multi-year supervision plan, or targeted, initiated if there is suspicion of certain irregularities that could pose the risk to the company’s operation or consumer protection, or based on complaints received from citizens. In the area of insurance, Hanfa can also carry out examinations involving mystery shopping, where Hanfa’s authorised personnel examine business processes within the company, pretending to be financial services users.

The primary goal of all Hanfa’s supervisory activities is the protection of the interests of users of financial services and preservation of the stability of the financial market.

The scope of an examination can include the entire business operations or only a part of the business operations of the supervised entity, and the examination can be prudential (focusing e.g. on solvency, liquidity or financial stability of its business operations) or may focus on the supervised entity’s conduct (e.g. compliance with laws and regulations that govern its operation or treatment of consumers).

The implementation of supervisory activities is prescribed by lex specialis acts (e.g. Capital Market Act, Insurance Act and others), which prescribe all the supervisory processes and powers of Hanfa. However, the provisions of the General Administrative Procedure Act are also applied during the supervisory procedure.

If a company fails to eliminate the unlawfulness and irregularities established during an examination, Hanfa is authorised, in line with its legal powers, to initiate other legal actions.

In its supervisory activities, Hanfa places the greatest emphasis on supervised entities’ management of risks which directly affect the stability of business operations and consumer protection, and, in the long run, the stability of the overall financial system.


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