Internal discussions on whether members of the AFM's supervisory board can hold positions in companies or financial institutions prompted the Minister of Finance to conduct an integrity audit in early September 2014. A few weeks before the audit, four of the five supervisory board members resigned. This allowed a complete change in the composition of the board, one of the recommendations that later emerged in the integrity audit report. The report draws firm conclusions and gives recommendations, especially on what supervisory board members may do in other organisations. According to the Minister of Finance, a complete change in the composition of the supervisory board will contribute to the necessary improvements. The Minister will further develop the report's recommendations in consultation with the AFM. These events suggest that the government is strengthening its grip on independent conduct supervision in the Netherlands.
According to the report (available only in Dutch), the AFM was keeping insufficient distance from the institutions that it supervises, and the AFM's supervisory board members should not have held certain positions at supervised institutions. The report stated that there should be no doubt about the AFM's exemplary role in relation to the industry that it supervises. The AFM should have clear internal rules for integrity and conduct, and any suggestion of conflict of interest should be avoided.
The AFM is an organisation carrying out public duties, but it is not directly subject to the authority of a government ministry. The Minister of Finance can, however, influence the selection of executive board and supervisory board members.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
