Danish FSA Assesses Fully Sustainable Funds, Issues Other Updates

Below are the key details of the recent developments:

• DFSA conducted a thematic survey to examine whether investors receive the sustainability information to which they are entitled and whether this information is provided in a clear, complete, and understandable manner. The investment management companies must, among other things, ensure that the fund discloses which sustainability goals it contributes to through investments (the sustainable investment goals), how the fund ensures that the actual investments are in line with the goals, and which sustainability risks the investor assumes. The results show that, overall, the investment management companies for the eight funds have not ensured that the information on sustainability has been provided in a clear, adequate and understandable way. DFSA finds that the prospectuses for several funds contain insufficient information on how to ensure that the investments do not cause significant damage to any social or environmental objectives. DFSA also notes that the document with central investor information (KIID) for several of the funds either does not contain a description of the funds' sustainable investment objectives or contains a description of the objectives which is not consistent with the information in the prospectus. Based on the insufficient information in the prospectuses and the KIID, DFSA has issued orders to the investment management companies of the funds to ensure that the information requirements are complied with. During 2023, DFSA will also publish a memo which describes what DFSA has identified in the study as good practice in the area.
• DFSA issued a memo that describes the updated principles for determining impairment liabilities (NEP requirements) for the non-systemically important financial institutions, including the calculation method and the phasing-in requirements. The principles for determining the NEP requirements for non-systemically important financial institutions have been updated in connection with the implementation of the Bank Recovery and Resolution Directive (BRRD2) in Danish law. The principles reflect current practice and contain only the necessary adjustments as a result of BRRD2.
• DFSA published a memo that sets out requirements for the application process of new and existing providers of crowdfunding services to obtain a permit from the national supervisory authority before offering their services to the public. The memo states that new and existing crowdfunding service providers must obtain a permit from the DFSA by November 10, 2023 at the latest in order to continue to offer crowdfunding services. A crowdfunding service provider operates a digital platform open to the public to match or facilitate the matching of potential investors or lenders with businesses seeking funding.
• DFSA, is seeking comments, until March 21, 2023, on draft guidance for an Executive Order on good practice for housing credit. The draft guidance replaces guidance no. 9619 of September 10, 2020 for an executive order on good practice for housing credit. The amendment to the draft guidance covers introduction of an example where the payment requirement can be waived in connection with the purchase of a co-operative home in a co-operative housing association that was formed by converting a rental property where the obligation to offer is applicable, including a number of language changes and minor adaptations.

Related Links (in Danish)

• Survey on Fully Sustainable Funds
• Press Release on NEP Requirements
• Press Release on Crowdfunding Service Providers
• Consultation on Good Practice for Housing Credit