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Netherlands Eyes Key Changes To Financial Market Rules In 2014

by Ulrika Lomas,, Brussels

27 December 2013

The Dutch Finance Ministry has announced that a number of key changes to financial market laws and regulations are due to enter into force in the Netherlands from January 1, 2014.

The most important legislative changes include plans to impose a "commissions ban" on investment companies, to prevent "perverse incentives." The ban is to apply to investment services including individual asset management, investment advice, and execution-only services. Under the plans, the client will also be required to pay directly for any services received. These measures aim to reduce the risk of an investment company not acting in the interest of the customer, because of the commission incentive.

Furthermore, companies that settle "cashless" or electronic payment transactions will be subject to legal supervision from next year. This is due to the high volume of electronic payments now made in the Netherlands, and to the internationalization of electronic payments. De Nederlandsche Bank (DNB) and the Dutch Financial Market Authority (AFM) will be responsible for supervision. A compulsory licence requirement for domestic and foreign clearing companies is also intended to promote an orderly and transparent market process.

As part of efforts to protect customers from "bad financial products," the Government aims to introduce a general duty of care requirement for financial service providers in 2014. The general duty of care obligation will ensure that customers play more of a central role for banks, insurers, and other financial service providers. Moreover, the AFM will be able to intervene earlier in cases of abuse.

Finally, just as in other countries, the Dutch Government will require higher capital buffers for "systemically important banks." The DNB regulator will be required to identify banks and investment companies that are systemically important, and to determine the amount of the required buffer for that particular institution.

TAGS: Finance | investment | Netherlands | interest | law | regulation | services

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