On 29 June 2016, the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM) published its response to a report on the manner in which the AFM supervised and evaluated the reassessment of interest rate derivatives by banks (the Report). The Report has been prepared by an independent external research agency (Alvarez & Marzal).

The Report provides that a convergence of circumstances has led to shortcomings in the AFM’s evaluation of the reassessment (the shortcomings are not of a structural nature). As a result, the AFM was unable to effectively exercise its supervisor role. The circumstances that led to this situation included, but were not limited to:

  • the complexity of the matter at hand;
  • the AFM’s limited experience with these types of matters;
  • (under)staffing of the AFM’s project team; and
  • deficiencies in the AFM’s project governance and a lack of consistency.

The Report contains a number of lessons learned from this project (in respect of a number of these points the AFM has already started making improvements), including the need to continuously monitor the complexity, staffing requirements, project governance and application of AFM standards and defining the roles and responsibilities of the persons working on a project in a clear manner.

In its response to the Report, the AFM indicates that it will take the findings in the Report into consideration and will take measures for improvement.

View the AFM’s response to the Report (Dutch only), 29 June 2016.

View the Report (Dutch only), 28 June 2016.