​Danish watchdog finds pension product failings at Nordea Pension

Denmark’s financial watchdog has given Nordea Pension several official orders to correct procedures, after finding a lack of control at the firm over market-rate pension products, which it said could mean the products were not as described.

In a statement on an inspection the Financial Supervisory Authority (FSA) said it had carried out in April and May this year at Nordea Pension, the Authority said it had broadened an initial probe relating to product characteristics of market-rate products, and the associated risk management system, including sustainability risks.

After reviewing material submitted, the FSA said it had decided to expand the inspection, including looking at Nordea Pension’s use of escrow accounts in investment management.

In one instance, the FSA said it had found Nordea Pension’s board had failed to take an adequate position on the product characteristics of individual market-rate products — for example, on the payment profile.

“Failure to take a position entails a risk of uncertainty and unpredictability in the customer’s payment process,” it said.

Based on this failing, the authority said it had given the Danish pensions firm risk notice and an official order.

Another order imposed by the FSA following the inspection, was for Nordea Pension to make sure the risk management and internal control systems of the asset manager to whom it outsourced did not impair the quality of management at Nordea Pension, or increase its operational risk.

Having found that in a number of areas, Nordea Pension had either failed to set risk tolerance limits or that such limits were unclear, the FSA also ordered the pensions firm to set controllable risk tolerance limits.

Responding to the FSA’s report, Vivian Byrholt, chief executive officer of Nordea Pension, said, in a statement: “We take note of the Financial Supervisory Authority’s report and have initiated measures to ensure that we comply with the Financial Supervisory Authority’s order as soon as possible.”

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