Overview of recent regulatory developments in Financial Services
This overview provides a selection of relevant legal developments regarding financial services regulation including a draft policy by the AFM on sound information, the European ban on binary options and restrictions for CFDs, enhanced focus on consumer credit checks and an update on PSD2 and new publication rights for the Dutch regulators.
Final rules and regulations implementing the IDD
The final Dutch rules and regulations implementing the Insurance Distribution Directive (2016/97/EU) have recently been published. As a result, the new regime is now final. These rules and regulations are expected to apply from 1 October 2018, except for the rules on appropriate knowledge and ability of relevant staff which will take effect on 23 February 2019. This provides the individuals affected with time to comply with the new requirements on professionalism. Further explanation of the new IDD regime and guidance on the interpretation of this regime is also provided by the AFM on its website, which includes helpful factsheets on various IDD subjects. For further information, we also refer to our January 2018 News Update on the IDD.
Extended power for DNB and AFM to publish information on violations
From 1 July 2018, the Dutch regulators DNB and AFM have been granted further authority to immediately publish information on violations of the Dutch Act on Financial Supervision. This authority relates to a larger number of serious violations that can be penalised by penalties in the highest category. In accordance with the new rules, DNB and AFM may give public warnings for serious violations in order to prevent or mitigate further damage. In addition, DNB and AFM may also respond by public notice to allegations of statements made by perpetrators in respect of alleged or actual violations. Finally, DNB will be allowed to publish certain financial details (e.g. ratios) on banks. In this respect, DNB will be publishing combined reports including details further to CRR and published annual accounts in order to better inform the general public.
Draft guidance by DNB on warranties qualifying as insurance products
DNB has recently made public new draft guidance on the scope of the rules and regulations on insurance products. This draft guidance focuses on the qualification of certain warranties as insurance products. The background to this is that DNB has considered certain (extended) war-ranties to be insurance products for many years already. The reasoning for this is that as long as a warranty meets the criteria for a non-life insurance product and covers more than a statutory product warranty does, the warranty will be treated as an insurance product as a result of which the provider of the warranty is considered to be an insurance undertaking, thereby triggering a licence obligation for the warranty provider. The new draft DNB guidance focuses on warranties provided when purchasing a product and explains that if certain conditions are met, such warranties are not considered to be an insurance product. As such, it seems that DNB is limiting the scope of its view of warranties qualifying as insurance products. However, since this DNB guidance is in draft and is still open to consultation by market parties, this interpretation should not yet be relied on. In addition, this draft guid-ance still leaves certain questions unanswered.
Partial termination of entitlement to premium collection for intermediaries
From 1 July 2018, intermediaries no longer have a statutory right vis-à-vis insurance undertakings to collect premiums in respect of insurance products that are subject to the commission ban. As a result, the right to collect premiums no longer exists for life insurance products, payment pro-tection insurance products and individual disability insurance products. The background to this partial termination is found in the reconsideration of the commission ban. Part of this explained that current account relations between insurance undertakings and intermediaries as a result of premium collections by the intermediaries may provide a negative incentive to intermediaries.
New guidelines on suitability assessment
From 30 June 2018, new joint ESMA and EBA guidelines on the assessment of the suitability of members of the management body and key decision makers (policymakers) of banks, (mixed) financial holdings companies and investment firms apply. These guidelines provide for a harmo-nised approach to the suitability assessment by competent authorities. These guidelines apply not only to newly appointed individuals but also to individuals already in position. This is due to the requirement for reassessment of suitability in the case of material changes or on a periodic basis. As such, all financial institutions referred to must take these new guidelines into account.
While the Netherlands continues to lag behind in implementing PSD2, as the relevant bill is still being discussed in parliament, DNB is proactively working towards ensuring the compliance of existing and new payment services providers. In addition to existing payment services providers and their shareholders working towards PSD2 compliance, interested parties are able to already submit draft PSD2 licence applications in draft from 6 July 2018. This will allow DNB to start reviewing applications submitted in order not to lose time as soon as the PSD2 regime has been implemented in Dutch legislation.
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