A stable, well-functioning financial market for allA stable, well-functioning financial market for allRisks in the financial system 2012
Finansinspektionen’s (FI’s) 2012 risk report 2012 continues to focus on unease on financial markets, where the greatest risk to the Swedish financial system is still a deepened sovereign debt crisis in Europe. Because of low market rates, life insurance undertakings are under pressure, and FI now sees a risk of consumers ending up in a squeeze as the firms review their commitments. This year too, FI views the financial advice market with concern. In this market, consumers are being invited to invest in complex products while advisors receive commissions.
During 2012, unease on financial markets has subsided slightly, mainly due to central bank measures. Uncertainty about the global economic trend is still high, and the risk of a deepened debt crisis in Europe is particularly worrying. Swedish banks are well-capitalised today with robust resilience, but they are heavily reliant on market funding, which could make the Swedish banking system vulnerable in the event of the debt crisis taking a turn for the worse.
FI has continued to monitor the strained situation of life insurance undertakings, and it is important that they review their business models. Now that the firms are reviewing their commitments, FI sees a risk of the firms taking advantage of the information disadvantage of consumers by not offering market terms.
FI remains concerned about the financial advice market, in which consumers are being offered complex products and given unsuitable advice. Certain products are so complex that not even well-informed consumers understand the fees being charged, the risks involved and how the expected return is generated.
For some time, FI has been calling attention to its view that micro loan firms and deposit institutions should come under FI's supervision. In the past year, the firms' increasingly aggressive marketing has worsened the situation of consumers, and the need for regulation has increased. Today, FI sees a heightened risk of consumers risking ending up in debt traps or losing savings.
