News Update Financial Regulatory

In this News Update, we discuss the European Commission's consultations on the PSD2 review, open finance and data sharing; the bill amending the Trust Offices Supervision Act 2018 concerning measures to prohibit trust services in cases involving high integrity risks; and the consultation on the Recovery and Resolution Insurers Amendment Act. We further highlight some other financial regulatory publications issued since our last News Update was published.

European Commission | Consultations on the PSD2 review, open finance and data sharing

On 10 May 2022, the European Commission ("Commission") launched three consultations.

• Targeted consultation on the review of the revised Payment Services Directive
  The target group of this consultation includes payment service providers, payment service users, national authorities, EU authorities and international organisations. The consultation aims to ensure that the revised Payment Services Directive ("PSD2") continues to meet its objectives. These objectives include a more integrated, competitive, and efficient European payments market, a level playing field for all payment service providers, safer and more secure payments, and consumer protection. The envisaged review takes stock of PSD2's impact on the payments market and its developments since it was implemented. These include new market players and payment solutions, services and technologies that emerged, and payment needs that changed due to continuing digitalisation. PSD2's effectiveness, efficiency, costs and benefits, coherence and added value will be assessed, as well as the need for changes and their type and scope. The review will also evaluate how PSD2 is applied, including how it is enforced by national authorities. It will also assess the need for possible legislative amendments, ensuring that the EU legal framework for retail payments remains fit for purpose.
  
  Responses to the consultation can be submitted until 5 July 2022 by completing the online questionnaire.


• Targeted consultation on the open finance framework and data sharing in the financial sector
  The Commission notes that in finance and beyond, there is a broad technology-driven trend towards greater use of data and data sharing.
  
  Open finance refers to third party service providers’ access to (business and consumer) customer data held by financial sector intermediaries and other data holders to provide a wide range of financial and information services. Currently, third party service providers must rely on limited sources of customer data access rights in the financial sector: PSD2 concerning payment accounts data of both retail and business customers, as well as the General Data Protection Regulation ("GDPR") regarding personal data held by any financial service provider. However, GDPR enables third party service providers to have direct access only when it is technically feasible, which therefore does not guarantee such access. The recent Data Act proposal does not introduce any new data access rights in the financial sector either.
  
  The lessons learned from PSD2 on third party service providers’ access rights to payment accounts upon customer request will be considered when designing the open finance framework. Since the entry into force of PSD2, several stakeholder initiatives in this area have also developed, including application programming interface standardisation and access schemes.
  
  The targeted consultation's objective is to gather evidence and stakeholder views on various aspects related to the state of play, further develop open finance in the EU and effectively protect customers. The consultation is targeted at different stakeholder groups: customers of financial services firms (consumers and corporate customers), financial institutions and other firms which are either holding data or intending to use it.
  
  Responses to this consultation can be submitted until 5 July 2022 by completing the online questionnaire.


• Public consultation on the PSD2 review and open finance
  In addition to the abovementioned targeted consultations, the Commission launched a public consultation on the PSD2 review and open finance. For this consultation, no in-depth knowledge of PSD2 or open finance is required. The Commission noted that the results of all three consultations will inform the PSD2 review and open finance policy and serve as input for impact assessments accompanying possible legislative proposals revising PSD2 or setting up an open finance framework.
  
  Responses to the public consultation can be submitted until 2 August 2022 by completing the online questionnaire.

Bill amending the Trust Offices Supervision Act 2018 concerning measures to prohibit trust services in cases involving high integrity risks

On 17 May 2022, the abovementioned bill (only in Dutch) was submitted to the House of Representatives. The bill intends to prohibit the following trust services: offering conduit companies (doorstroomvennootschappen) and trust services involving high-risk third countries or countries on the list of non-cooperative countries for tax purposes.

Currently, the use of a conduit company for a client is a trust service as defined by the Trust Offices Supervision Act 2018 (Wet toezicht trustkantoren 2018). This involves using legal entities or companies belonging to the trust office's group to facilitate funds flow through such legal entities or companies for tax purposes. This may include, for example, dividends or royalties.

In the fight against tax avoidance and evasion, the Dutch government considers it undesirable that conduit companies are still offered in the Netherlands on a professional or business basis. Therefore, it was proposed to remove this trust service and include a total ban on such services in the legislation.

Trust services often involve complex structures and the movement of large sums of money between companies. Involvement of countries with strategic deficiencies in their anti-money laundering policies can lead to unjustifiably high integrity risks. Thus, the bill proposes to prohibit trust companies to provide trust services if the client, the target company, or the beneficial owner of the client or target company is resident or established in a high-risk third country.

Trust services combined with structures involving countries on the list of tax non-cooperative countries can accumulate tax integrity risks. To curb this problem, the bill prohibits the provision of services to clients, target companies, beneficial owners of clients and target companies from countries on the list of non-cooperative tax countries.

Ministry of Finance | Consultation on Recovery and Resolution Insurers Amendment Act

On 19 May 2022, the Ministry of Finance launched the consultation on the bill (only in Dutch) Recovery and Resolution Insurers Amendment Act. The bill aims to streamline the legal protection regime in the resolution of insurers and to introduce several minor improvements to the resolution framework for insurers.

Several omissions in the legislative framework on bank resolution were identified and corrected since introducing the Implementation Act on loss absorption and recapitalisation capacity of banks and investment firms (Implementatiewet verliesabsorptie- en herkapitalisatiecapaciteit van banken en beleggingsondernemingen). As the Dutch resolution framework for insurers is largely based on the framework for banks, it is advisable to make similar amendments to the resolution framework for insurers and concurrently correct some inaccuracies and legal omissions.

The Financial Supervision Act (Wet op het financieel toezicht) currently contains an exception to the general regime of administrative law protection regarding the resolution decision. This special rule was chosen because the decision is far-reaching in nature and, moreover, quickly leads to irreversible consequences. Thus, a quick and definitive judicial ruling on the lawfulness of this decision is desirable. A similar consideration applies to the use of the bail-in resolution tool. During the drafting of the Implementation Act, it was established that the accelerated legal protection regime for banks had wrongly been applied only to the resolution decision itself, and not to the decisions on the use of the resolution measures. This has now been resolved for banks. For insurers, the present bill provides for these changes.

Other financial regulatory publications

We have highlighted other publications by legislatures and regulators for the financial markets and financial supervision since our May 2022 News Update.

Ministry of Finance

• Bill on implementation of the recovery and resolution of central counterparties regulation (Wetsvoorstel Uitvoeringswet verordening herstel en afwikkeling centrale tegenpartijen, only in Dutch)

Dutch Authority for the Financial Markets

• Response to public consultation on the functioning of the ESG ratings market in the EU and on the consideration of ESG factors in credit ratings

Dutch Central Bank (De Nederlandsche Bank)

• News release (only in Dutch) on notification requirement for deposits above EUR 100,000 for Russian or Belarusian nationals
• News release on increase of countercyclical capital buffer

European Supervisory Authorities

• Clarifications on draft regulatory technical standards ("RTS") under the Sustainable Finance Disclosure Regulation ("SFDR")
• Joint Report on the withdrawal of authorisation for serious breaches of AML/CFT rules
• Joint Supervisory Statement on the Packaged Retail and Insurance-based Investment Products Resolution's key information document

European Banking Authority

• Consultation paper on Guidelines to resolution authorities on the publication of their approach to implementing the bail-in tool
• Final report on draft RTS on criteria for the identification of shadow banking entities
• Decision concerning supervisory reporting for intermediate EU parent undertaking threshold monitoring
• Report on the peer review on supervision of management of non-performing exposures
• Consultation paper on draft RTS on standardised information requirements to support sales of non-performing loans
• Final report on draft RTS for crowdfunding service providers
• Report on convergence of supervisory practices in 2021
• Final report on draft RTS regarding benchmarking of internal approaches
• Final report on advice on non-bank lending

European Insurance and Occupational Pensions Authority

• Discussion paper on physical climate change risks
• Feedback statement on discussion paper on blockchain and smart contracts in insurance

European Securities and Markets Authority

• Updated Q&As on the application of the AIFMD, the application of the UCITS Directive, the Central Securities Depositories Regulation, the European crowdfunding service providers for business Regulation, and MiFID II and MiFIR transparency topics
• Four consultation papers and six final reports on the central counterparty resolution regime
• Final report on the possibility to extend the transitional period for crowdfunding service providers

Single Resolution Board

• Addendum to the public interest assessment Deposit Guarantee Schemes considerations

Commission

• Consultation document on the regime applicable to the use of benchmarks administered in a third country

If you have any financial regulatory questions, please do not hesitate to contact Berry van Wijk and Roel Theissen. For questions related to Investment Management, you can also contact our colleagues Oscar van Angeren and Marthe Bollen.