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Finansinspektionen (FI), the Swedish financial supervisory authority, has not ruled out naming and shaming those life and pension funds that trigger a red light situation under its recently launched traffic light supervisory system.
Almost 1 per cent of life and pension investors – in terms of assets under management – set off the supervisory authority’s red light at the end of the first quarter of this year but the FI decided against making the names of those funds public.
However, Martin Blåvarg, FI’s chief economist, told nrpn that once the system is operating smoothly and investors are used to its workings, the authority has every intention of naming those investors with inadequate buffers.
“It was always our plan to name those firms that entered into the red light but at the last minute we decided to abandon that idea,” said Mr Blåvarg. “Investors were very much against us doing that and, as this new system is a huge change for them, we thought it right not to go public until it was working smoothly. But that is not to say that we won’t name and shame firms in future – there is value in doing that and it is our plan to do so.”
Mr Blåvarg dismissed that there had been any move out of equities into bonds as a result of the traffic light supervisory system’s introduction, but said that there had been minor changes to investors’ fixed income holdings.
“Over the first three months of the system’s launch, there has been a slight move into long-dated bonds at the expense of short-dated notes but no noticeable shift out of equities,” he said.
Sarah McPhee, CIO at AMF, added: “The new supervisory system has not affected us in any specific way. Our solvency is at 220 per cent at the moment so we are in a very strong financial position. The new system has had a more visible affect on the overall market by putting pressure on long-term interest rates, which may change when long-term rates are valued more neutrally.”
Similarly, Gunnar Andersson, managing director, KP Pension and Försäkring expressed his contentment with the current situation. He added: “We are very confident with our financial situation and the traffic light supervisory system has confirmed that view. However, the new system has also given us an opportunity to investigate our risk situation more. As a consequence we have turned more to fixed income investments with longer duration than we used to.”
CN
