Legislative letters AFM and DNB published

Last week the legislative letters of DNB and AFM for the year 2019 have been published (link, in Dutch). The letters, and the corresponding response by the Minister of Finance, will be discussed below.

Legislative letter DNB

In general, DNB states that new legislation like PSD2, the revision of CRR and CRD IV, BRRD and the new Regulation about a new resolution mechanism require a lot of time. Furthermore, DNB will investigate whether it is desirable to intensify the cooperation with the Dutch Data Protection Authority on the exchange of data in case DNB notices violations of the General Data Protection Regulation by payment service providers and whether or not the cooperation should be expanded to other forms of financial service provision. In addition, DNB notes a few problem areas with respect to the applicable legislative framework and formulates a legislative wish.

Firstly, DNB states that, despite the introduction of a resolution mechanism for insurers, the complete package of resolution measures still shows omissions. Therefore, the instrument cannot be used effectively yet. The Minister has responded that his Ministry already started discussions with DNB on this subject.

Secondly, DNB points out that its legislative wish with a mandatory audit for an insurance group has not transposed into a legislative proposal yet. DNB would still like to see this happen, with a mandatory audit for payment service providers (including e-money institutions, and payment institutions). The Minister has responded that in principle he has a positive attitude towards these proposals but that he first wants to investigate the expected aggravation of administrative burdens.

Legislative letter AFM

In its letter, the AFM points out a few subjects that may lead to legislative changes in the near future, like the Brexit and safety risks as a consequence of digitalisation. The AFM keeps an eye on developments to be able to respond with legislative wishes. Furthermore, the AFM formulates, amongst others, the following legislative wishes:

Firstly, the AFM request the Minister to take the necessary legislative steps in the area of consumer protection in order to address the problems with payday loans. The Minister has responded that he already announced measures regarding payday loans and that he will continue to discuss this subject with the AFM.

Secondly, the AFM wishes a legislative proposal that allows the providers of purchase finance to provide credit only if it suits the (financial) situation of the customer and his spending purpose. In his reaction the Minister states that he will review the legislative framework with respect to purchase finances in May 2019, and that he will take legislative measures if necessary.

Thirdly, the AFM has also noticed that the legal safeguards for product development for insurers and premium pension institutions (the Product Approval and Review Process requirement, or “PARP-requirements”) are not applicable to pension funds. Therefore, the AFM would like to cooperate with the Ministry of Social Affairs and Employment and DNB, to introduce these legal safeguards for pension funds as well. The Minister of Social Affairs and Employment will respond to this matter at a later stage.

Lastly, the AFM emphasizes that it would like to see some of its previous legislative wishes being transposed into legislative proposals. First, the AFM would like to enhance the transparency on financial reporting. In his response the Minister has stated that the Dutch Accounting Standards Board does not support the change of the requirements of financial reporting. Second, the AFM would like to have more possibilities to exchange data with the Dutch Data Protection Authority on violations of the General Data Protection Regulation. The Minister has stated that this is not possible due to European legislation. However, PSD2 allows the AFM to share data with the Dutch Data Protection Authority in case a payment service provider violates the General Data Protection Regulation. Third, the AFM would like a revision of the categories of fines by violations of MiFID II or the IDD. The Minister has responded by stating that the current categorization reflects the most proportionate approach.