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Consultation of the AFM's draft policy regulation on incidents

Consultation of the AFM's draft policy regulation on incidents

Consultation of the AFM's draft policy regulation on incidents

08.10.2015 NL law

On 30 July 2015, the Netherlands Authority for the Financial Markets started a public consultation on its draft Policy rule on incidents (Beleidsregel incidenten). The consultation deals with how the concept of an 'incident' should be interpreted.

Dutch financial supervision law defines an 'incident' as a certain behaviour or an event which represents a serious risks to a financial institution's integrity or reputation. Incidents must be notified to the Netherlands Authority for the Financial Markets (Autoriteit Financëele Markten, the "AFM").

In its draft policy rule, the AFM shares its view on the interpretation of this concept. The draft policy rule contains a non-exhaustive list of examples of incidents. Examples include:

  • becoming aware of a potential breach of the Dutch Financial Supervision Act (Wet op het financieel toezicht);
  • a client has filed a complaint with the financial institution that one or more of its employees have displayed unethical behavior;
  • the Dutch Tax Authority (Belastingdienst) has imposed a fine on the undertaking;
  • a board member of the undertaking has entered into a private securities transaction without obtaining a required permission from the Compliance Officer under the company's insider trading policy; and
  • the undertaking has been held liable by a client for a considerable amount of money and such claim could impose serious danger for the undertaking.

The draft policy rule appears to adopt a broader interpretation of the concept of incidents than the Dutch legislator did when the current definition was enacted in 2007. At that time, the legislator took the position that an event only qualifies as an incident if a certain conduct forms a serious threat to the controlled and sound business operations of the financial undertaking, and expected a decrease in the number of notifiable incidents. The current proposal may in contrary thereto lead to an increase of notifiable incidents.

The policy rule is expected to enter into force once the consultation has been finalised.

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