Short Reads

Revised General Banking Conditions

Revised General Banking Conditions

Revised General Banking Conditions

06.04.2017 NL law

The Netherlands Bankers' Association (the "NVB") has reached an agreement with business and consumer associations on revised general banking conditions following an evaluation of the old general banking conditions from 2009. The revised general banking conditions (the "GBC") came into effect on 1 March 2017 and will generally apply between Dutch banks and their (business and consumer) clients.

The revised GBC are meant to be more accessible and easier to understand. They also include examples for guidance in the provisions themselves. Aside from simpler and more understandable wording, some substantive amendments have been made. This article briefly highlights the six most important changes for businesses.

  • Duty of care provision expanded (art. 2)

    The scope of the duty of care of the bank has been further expanded with respect to the products and services offered to its clients. Article 2 now explicitly states that the bank aims to provide comprehensible products and services. Furthermore, clients are obliged to provide the information specifically required by the bank so it can comply with its obligations towards (national, international, supranational, supervisory, tax or other) authorities. The client is now also obliged to provide information of its own accord if that information is clearly required by the bank.
     
  • Bank no longer authorized to use own initiative to reverse crediting an account as a result of an order of an unauthorized person (art. 19)

    In the past, when dealing with businesses, banks used to be able to use their own initiative to reverse crediting an account of a client as a result of an order by an unauthorized person or a person without a legal capability to act. The bank now no longer has this authority. For this purpose the third paragraph of the old article 19 has been removed. To remedy unauthorized orders, a follow-up order from the client is now required. Under the GBC the bank remains authorized to correct, without the permission from the client, an error made by the bank when executing its services.
     
  • Further clarification in respect of rates and fees (art. 22)

    Article 22 that deals with commission, interest and fees has been further clarified. The second paragraph of this article now stipulates that if the bank through an obvious error on its part has not agreed on a fee or rate with the client, the bank may only charge the client a fee according to the rate that it would charge in similar cases. This provision is intended to prevent clients from being charged excessive amounts. The third paragraph aims to set a standard for the process of a change of rates. If the bank changes its rates based on this article, it will need to inform the client prior to the rate change to the extent that this is reasonably possible.
     
  • Clarification of the scope of the right of pledge (art. 24)

    This article clarifies what falls within the scope of the right of pledge, which is vested by the acceptance of the GBC. The right of pledge not only extends to the credit balance on a bank account, but also to coins, banknotes, moveable property, shares and securities or other financial instruments of the client which are held at the bank. This article also stipulates that the power of attorney granted to the bank by the client to pledge assets to itself on the client's behalf, and to do so repeatedly, ends as soon as the relationship between the bank and the client has ended and is completely settled.
     
  • Amendments to the obligation to provide collateral (art. 26)

    Some amendments have been made to article 26, the provision regarding the obligation of the client to provide, upon request, the bank with (additional) collateral as security for the amounts owed. The new subparagraph 1(c) explicitly states that the client must provide the collateral required by the bank. The GBC give as an example that a client may not provide a pledge on its company assets if the bank requires a pledge on its inventory. This means that even if the company assets would have the same (coverage) value as the inventory, the bank is entitled to insist on being granted a right of pledge on the inventory of the client. Furthermore, subparagraph 1(d) of article 26 now explicitly states that a client may be asked to agree to a security surplus arrangement (overwaarde-arrangement) under which the bank may obtain any surplus proceeds realized from the enforcement of security rights vested in favor of another creditor. This inclusion reflects recent case law from the Dutch Supreme Court, which ruled that these security surplus arrangements, if well structured, are bankruptcy proof. Please click here if you would like to read more on security surplus arrangements.
     
  • Amendments in relation to special costs (art. 28)

    Further to the provision that the bank may require the client to compensate it for special costs to the extent that compensation is reasonable, the bank will be required to inform the client and explain why these costs are necessary. This may also apply to appraisal costs, advisory fees and costs for extra reports. Article 28 now also includes the rule that if there is a legal regime for special costs it will be applied. According to the NVB, the revised provision entails, amongst other things, that legal costs incurred by a bank in legal proceedings against a client but where the court has ruled in favor of the bank, the bank's claim for compensation of legal costs will be limited by the court's tariffs scale and thus the client will not be asked to pay the entire legal (assistance) costs.

Team

Related news

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

12.03.2019 LU law
Entry into force of the RBE Regulation and update

Articles - The Grand-Ducal Regulation of 15 February 2019 on the registration, payment of administrative fees and access to information recorded in the register of beneficial owners (the “RBE Regulation”) entered into force on 1 March 2019 and depicts the practical aspects of the Law of 13 January 2019 establishing a beneficial owner register (the “RBE Law”). Another document, the LBR Circular 19/01 (the “Circular”) issued by the Luxembourg Business Registers on 25 February 2019  further describes the new register of beneficial owners (the “RBE”) with the aim of helping users. 

Read more

21.03.2019 NL law
15 aspects of Brexit you did not know

Short Reads - A Brexit without a deal, or with a deal that does not cover all relevant aspects, is still a potential scenario. We have highlighted a number of unexpected legal consequences of Brexit in such a no deal or incomplete deal scenario.

Read more

13.03.2019 NL law
Financial Services Disputes in the Netherlands

Articles - What are the most common causes of actions taken by or against financial institutions and service providers in Dutch jurisdiction? Who has a right of action in financial services disputes? Does it make a difference if the customer is an individual or a commercial entity? Is there a specialist court or specialist judges for financial services litigation? Roderik Vrolijk and Daphne Rijkers provide answers to these and other questions about financial services disputes in the Netherlands.

Read more

22.02.2019 BE law
Lost your passport - How a hard Brexit will affect UK financial institutions’ access to the Belgian financial market

Articles - FSMA gives local guidance - Belgian legislature prepares contingency measures The UK is due to leave the European Union on 29 March 2019. Unless specific arrangements granting the UK at least a temporary status quo will be adopted before 29 March 2019, the UK financial industry will be considered third-country entities and will therefore be seriously restricted in carrying on their activities in the EEA, including Belgium.

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