On 12 April 2022, the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM) published the results of its investigation into advertisements (reclame-uitingen) of investment firms. For its investigation, the AFM reviewed advertisements of four investment firms in the fall of 2021.

Each advertisement needs to independently comply with the applicable requirements. A key requirement is that information on financial products and services needs to be correct, clear and not misleading. This requirement has been fleshed out in the AFM’s 2018 Policy Rule on the Provision of Information (Beleidsregel Informatieverstrekking 2018). Investment firms also need to specifically ensure that information contained in advertisements is accurate and, where potential benefits of an investment service or financial instruments are highlighted, the associated risks are correctly and clearly indicated.

The AFM identified a number of shortcomings, which they want to illustrate by means of a number of examples:

  • advertisements should not mistakenly give consumers the impression that investing is without costs, e.g. by speaking of ‘commission free investing’ without mentioning potential additional costs and/or restrictions;
  • investments firms regularly refer to ‘transaction credit’ (transactietegoed) in advertisements, which can give consumers the false impression that they can use this credit to purchase financial instruments, will get the credit immediately and/or that the credit will be available indefinitely. According to the AFM, transaction credit in practice can often not be used to purchase financial instruments, can only be used when entering into specific transactions meeting predetermined conditions, or have a limited period of validity (which means that consumers will need to enter into a large number transactions within a relatively short timeframe to make use of the full credit);
  • advertisements at times indicate that it is ‘safe’ to invest without providing an explanation or context as to why this is the case, which according to the AFM makes such advertisement unbalanced and not sufficiently clear (or misleading); and
  • advertisement often contain a generic statement such as ‘there are risks associated with investing’. The AFM indicates that such statement does not provide a correct and clear indication of the risks where potential benefits of an investment service or financial instruments are highlighted. The relevant risks should be made concrete (e.g. that loss of principal is possible).

The AFM expects investment firms to review their advertisements and ensure that their advertisements comply with the applicable rules and regulations, taking into account the 2018 Policy Rule on the Provision of Information and the results of this investigation.