Revision of the Dutch Act on financial supervision
Authored by: Thierry van den Bergh, LL.M, Associate Consultant at Synechron
On Friday the 2nd of December 2016, the Dutch Banking Association (Nederlandse Vereniging van Banken) hosted a conference in celebration of the (almost) ten-year anniversary of the Dutch Act on financial Supervision (the “Act”), known locally as de Wet op het financieel toezicht. Members of the academic community, the financial sector, their legal advisors, and the regulatory authorities gathered to discuss both the history and the future of the Act. Discussion of the latter was particularly relevant as the Dutch Ministry of Finance published a market consultation paper on November 22nd, regarding its investigation into the need to revise the Acts’ lay-out and composition. This investigation seeks to find ways of increasing the Acts’ accessibility and ensuring its readiness for the future.
2. History of the Dutch Act on financial supervision
To fully understand the current lay-out of the Act, one has to consider its legislative history. Back in 2002, Dutch law makers agreed that the sectorial approach of supervision – various supervisors and supervisory laws for various types of financial institutions (e.g. banks, insurance companies, pension funds) – was best replaced by a so-called ‘functional approach’. This approach comprised of two pillars: the Dutch central bank (De Nederlandsche Bank) would be responsible for all prudential supervision, whilst the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) would be responsible for supervising business conduct. The word ‘functional’ refers here to the respective functions of each the two regulators (together known as the ‘Twin Peaks’): combining the various sectorial laws into one single law, with sections relevant for each regulator, would provide an uncluttered supervisory framework.
In addition, the need for the sectorial approach, preceding the functional approach, lost its relevance due to the fact that financial institutions were increasingly offering financial products across sector borders (e.g. banks offering insurance products).
Since its introduction in 2007, the Act has been amended no less than 75 times (increasing its size by 70%), most often for the purpose of implementing European directives.