On 29 April 2022, the Dutch Minister of Finance published for consultation the draft legislative proposal for the Amendment Act Financial Markets 2024 (Wijzigingswet financiële markten 2024, the Amendment Act 2024). This legislative proposal is part of an annual cycle of changes to the legislation relevant to the Dutch financial markets. Changes that are part of this annual cycle tend to be less significant and do not justify a separate legislative proposal.
Besides some (minor) technical amendments and improvements to financial markets legislation, the most notable changes proposed in the Amendment Act 2024 include:
- the introduction of an obligation for insurers to be bound by disciplinary law in order to contribute to safeguarding of and, where necessary, improve the generally accepted standards of conduct within the insurance sector;
- a number of changes to the Act on the Supervision of Trust Offices 2018 (Wet toezicht trustkantoren 2018, the Wtt 2018);
- an extension of what constitutes ‘state aid’ in the context of the remuneration rules for investment firms; and
- changes to the prudential supervision of insurers with a view to improving the protection of policyholders.
(1) Insurers and disciplinary law
It is proposed that all insurers with their register office in the Netherlands will need to be bound by disciplinary law. This measure is introduced in part due to the desire to strengthen (the confidence in) the handling of personal injury claims by insurers.
Insurers affiliated with the Dutch Association of Insurers (Verbond van Verzekeraars) are already bound by disciplinary law, whereby complaints are assessed by the Financial Services Disciplinary Board. This board can directly impose sanctions and measures on insurers. By way of the Amendment Act 2024 it is proposed to embed disciplinary law for insurers in the Act on the Financial Supervision (Wet op het financieel toezicht) and to attach statutory safeguards. This will mean that all insurers having their registered office in the Netherlands will be required to submit themselves to a disciplinary procedure. Akin to disciplinary law for banks, the further implementation and organisation of the disciplinary procedure will be primarily up to the insurer and/or insurance sector itself.
(2) Changes to the Wtt 2018
A number of changes to the Wtt 2018 are being proposed.
- The definition of the trust service of ‘acting as a director’ is being tightened up to tackle ambiguity and prevent circumvention of the rules. This change is based on the results of the SEO Economic Research study into illegal trust offices. There seems to be an issue with the wording ‘on behalf of’ as included in the definition of the trust service. Some parties have interpreted this wording to mean that there needs to be a contract for services (opdrachtovereenkomst), which would accordingly mean that no trust service is provided in if there is an employment contract in place. This could lead to (and already lead to) trust offices entering into employment contracts with multiple companies to manage these companies and to remain outside the scope of the Wtt 2018.
- The definition of the domicile trust service plus additional activities will be tightened up. This definition will be aligned with the definition of domicile as used in the Act on the prevention of money laundering and terrorist financing (Wet ter voorkoming van witwassen en financieren van terrorisme).
- Trust offices will no longer require the Dutch Central Bank’s (De Nederlandsche Bank, DNB) prior approval for changes to their formal and factual control structure. It is believed that DNB is able to adequately perform its supervisory tasks as long as it is (immediately) informed of any such changes.
- DNB has called for a complete ban for trust offices to provide tax advice. The Dutch Minister of Finance believes a complete ban goes too far and has investigated alternative ways to clarify whether trust offices have previously provided tax advice to their clients (which is not permitted when also providing trust services to those same clients). It is being proposed that trust offices in their client files will need to include all tax advice obtained by such client. The advice included must clearly indicate who provided the advice and on what date. This should make it easier forDNB to determine whether the independent performance of customer due diligence by the trust office is guaranteed and what the background is to the tax advice involved.
(3) Extension of the definition support
A ban on variable remuneration payments for investment firms receiving state aid already exists. It is now proposed that the definition of ‘state aid’ is broadened to capture any public financial aid provided at a supranational level which, if provided at a national level, would constitute state aid.
(4) Prudential supervision of insurers
Two amendments to the prudential framework for insurers are proposed to better protect policyholders against behaviour from insurers that may entail risks:
- insurers will need to obtain DNB’s prior approval if it intends to enter into a so-called asset-intensive reinsurance contract; and
- insurers with their registered office in the Netherlands will need to obtain a declaration of no-objection (verklaring van geen bezwaar) from DNB if they want to admit shares or other participation rights for trading on a regulated market.
The deadline for responding to the consultation is 12 June 2022.