French Polynesia’s Financial Service Authority: Ensuring Financial Stability

The French Polynesia Financial Service Authority (FPFSA) plays a crucial role in maintaining the stability of the country’s financial system by supervising and regulating non-bank financial entities. To achieve this, the authority adopts a risk-based approach, using internationally accepted standards such as IFRS, CAMELS, PEARLS, BASEL I, and parts of BASEL II to assess the condition and soundness of institutions under its purview.

FPFSA’s Primary Concern: Building Financial Stability

The primary concern of the FPFSA is building financial stability by identifying and addressing emerging threats and risks in a timely manner. A stable financial system is crucial for maintaining market confidence, protecting consumers, and reducing financial crime. To achieve this, the authority regularly monitors institutions’ financial and operational conditions to ensure compliance with minimum prudential requirements.

Ongoing Monitoring: Off-Site Surveillance and On-Site Examinations

The FPFSA carries out ongoing monitoring through a combination of off-site surveillance and on-site examinations. Off-site supervision involves:

• Analyzing regulatory reports
• Financial statements
• Trend analysis of selected ratios

On-site inspections, however, involve assessing qualitative risks that cannot be evaluated remotely.

On-Site Assessments: Verifying Compliance and Evaluating Institutional Soundness

On-site assessments aim to verify compliance with relevant laws and regulations by evaluating an institution’s corporate governance through:

• Interviews with management
• Inspecting written policies and procedures
• Assessing their implementation

Additionally, the authority evaluates financial statements for accuracy, checks accounting records, assesses internal controls and audit functions, and examines investments and risk appetite.

Integrated Supervision: Rapid Problem Identification and Solution Prescription

The on-site and off-site supervision processes are designed to work together seamlessly, allowing FPFSA to rapidly identify and diagnose emerging problems in individual institutions and prescribe efficient solutions to maintain public confidence in the financial system.