Short Reads

Proposed amendments to the Dutch Financial Supervision Act in 2017 and 2018, and the revision of the Dutch Financial Supervision Act

Proposed amendments Dutch Financial Supervision Act 2017 and 2018

Proposed amendments to the Dutch Financial Supervision Act in 2017 and 2018, and the revision of the Dutch Financial Supervision Act

19.12.2016 NL law

On 27 July 2016, the preliminary draft of the Financial Markets Amendment Decree 2017 (Wijzigingsbesluit financiële markten 2017) and the bill amending the Dutch Financial Supervision Act 2018 (Wijzigingswet financiële markten 2018) were offered for consultation.

The most important changes proposed include the inducement ban for advisors and intermediaries, the requirement that the Dutch Central Bank must approve guarantees issued by parent companies, and an amendment to the current rules regarding the remuneration policies of financial institutions. It is envisaged that the proposed amendments will enter into force on 1 July 2017 and 1 July 2018 respectively. Unlike previous years, there is no proposed legislation to amend the Dutch Financial Supervision Act in 2017, which means that there will be no amendments in the first half of next year.

Furthermore, the Dutch legislator is currently exploring whether the Dutch Financial Supervision Act can be made clearer and more accessible to the market.

Changes from 1 July 2017

The preliminary draft of the Financial Markets Amendment Decree 2017 (Wijzigingsbesluit financiële markten 2017) proposes amendments relating to:

(I) the inducement ban for advisors and intermediaries advising on investments in investment funds; and
(II) robo-advice.

Scope of the inducement ban

Investment firms and financial service providers are prohibited from paying or receiving inducements to or from the provider for which they act as advisor or an intermediary. They must be paid directly by the client. In practice, certain investment firms that manage portfolio's for clients allow that the fee paid by a client to an advisor/intermediary is transferred from the investment account of the client. Consequently, the total amount on the investment account is not used to build up capital, since part of that amount is used to pay the advisor/intermediary. This is not appropriate according to the Dutch legislator. Therefore, the Conduct of Business Supervision on Financial Undertakings Decree under the Dutch Financial Supervision Act (Besluit gedragstoezicht financiële markten) will be amended to prohibit this. 

Robo-advice on financial products

Robo-advice means that clients are advised by "robo-advisors" without involving an actual person. The Dutch legislator wants to ensure that a client accessing such automated advice has the same protection as a client that is advised by an actual person. That is why financial institutions providing automated advice will be required to have procedures in place to ensure compliance with the same laws and regulations that apply to advice given by an actual person. In addition, for each financial product that is available using the automated service the investment firm must appoint a person that is responsible for the automated advice given.

Changes from 1 July 2018

The preliminary draft amending the Dutch Financial Supervision Act (Wijzigingswet financiële markten 2018) includes amendments relating to:

(I) the approval of the Dutch Central Bank ("DNB") of guarantees issued by banks, investment firms or insurance companies;
(II) a longer decision period for an application for a banking license; and
(III) remuneration policies of financial institutions.

Power of DNB to approve company guarantees

According to the Dutch legislator, guarantees relating to the debts of another (legal) person can undermine the solvency of the parent company and can reduce the liquidation possibilities of the group. The Dutch legislator therefore proposes that the DNB, or the European Central Bank ("ECB") for significant banks, must grant prior approval for the issuance of guarantees by (parent companies of) banks, investment firms an insurance companies with their statutory seat in the Netherlands. These guarantees include letters of comfort with respect to subsidiaries (403-verklaring).

A guarantee issued without approval will be null and void. The proposed amendment will not affect guarantees issued before the date this amendment of the Dutch Financial Supervision Act comes into effect.

Changes in remuneration policy

The Dutch legislator also proposes to amend the current rules on remuneration policies of financial institutions. Managers of investment funds, managers of UCITS and investment firms acting for their own account are currently exempt from the 20% bonus cap. The Dutch legislator proposes that this exemption should no longer apply if these entities are part of a consolidated group. This amendment is in line with the guidelines on sound remuneration policies under the Capital Requirements Directive IV, issued by the European Banking Association in December 2015 (source).

The legislative text of the proposed amendment and the explanatory memorandum can be found here.

An outline policy memorandum regarding a revision of the Dutch Financial Supervision Act

As a result of recommendations from the Council of State (Raad van State), the Dutch legislator is currently exploring whether the Dutch Financial Supervision Act can be made more user friendly.

The Dutch Financial Supervision Act, which entered into force on 1 January 2007, has been amended 75 times. As a result, the existing legislation has become difficult to apply in practice. The Dutch Minister of Finance aims to explore how to make the Dutch Financial Supervision Act clearer and more accessible.

The Dutch legislator has already held discussions with representatives from the financial sector, supervisory authorities, academics, and other stakeholders such as consumer organizations. Based on these discussions, together with further studies and analysis, the Dutch Minister of Finance published five options to amend the Dutch Financial Supervision Act in a consultation document dated 22 November 2016. The consultation period ends on 28 February 2017. The consultation document can be found here.

Team

Related news

26.05.2019 NL law
Duurzaamheidsverplichtingen voor de financiële sector: een overzicht

Articles - De komende jaren zal de financiële sector zich actiever dan voorheen moeten bezighouden met het klimaat en de verantwoordelijkheid die de sector draagt voor het milieu en de maatschappij. In rap tempo wordt er wet- en regelgeving ontwikkeld die financiële ondernemingen en aandeelhouders verplichten om aandacht te geven aan deze nieuwe rol die zij vervullen in de verduurzaming van de financiële sector en de maatschappij als geheel. 

Read more

13.05.2019 LU law
Stibbe renforce son cabinet luxembourgeois en nommant trois nouveaux Counsel

Inside Stibbe - Stibbe renforce son cabinet au Luxembourg avec la nomination de Vanessa Schmitt (droit des sociétés et droit financier), Olivier dal Farra (droit fiscal) et Frédéric Pilorget (droit des sociétés et droit financier) en tant que Counsel. Ces nouvelles nominations ont pris effet au mois d’avril et permettent à Stibbe de renforcer davantage son équipe luxembourgeoise en droit fiscal ainsi qu’en droit des sociétés et droit financier afin de continuer à répondre aux besoins du marché.

Read more

07.05.2019 NL law
ARRC releases recommended contractual fallback language for U.S. Dollar LIBOR syndicated loans

Articles - By now almost everyone knows that the world of interest rate benchmarks is going to change. Certain existing dominant and long-used inter-bank offered rates (IBORs) such as EURIBOR and LIBOR are likely to be restructured or may disappear all together as a result of new regulation and market forces. New alternative 'risk-free rates' (RFRs) that will replace the old IBORs have been identified or are being developed by a number of working groups for the financial markets that will be affected. 

Read more

13.05.2019 LU law
Stibbe reinforces its Luxembourg office with the appointment of three new Counsel

Inside Stibbe - Stibbe reinforces its Luxembourg office with the appointment of Vanessa Schmitt (Corporate & Finance), Olivier dal Farra (Tax), and Frédéric Pilorget (Corporate & Finance) as Counsel. The new appointments have taken effect in April and allow Stibbe to further strengthen its Luxembourg tax and corporate and finance teams to continue to respond to market needs.

Read more

11.04.2019 NL law
The Dutch UBO register will be introduced in January 2020

Short Reads - On 4 April 2019, a legislative proposal to implement the Dutch Ultimate Beneficial Owner (''UBO'') register (''UBO register'') was submitted to the Dutch parliament. The obligation to introduce a UBO register derives from the Fourth Anti-Money Laundering Directive as amended by the Fifth Anti-Money Laundering Directive. Approximately 1.5 million Dutch legal entities must register information on their UBOs in this register.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring