The most significant development in 2017 for financial institutions in the Netherlands will be the review of the Financial Markets Supervision Act (Wft). The Wft has been amended more than 70 times since it entered into force in 2007. A considerable number of the amendments were needed to implement European legislation. As a result, the Wft has become voluminous and complex. In order to make the Wft future-proof and easier to read, the Minister of Finance is considering a review of the Wft and has published an exploratory study of the options for public consultation.
The proposed options are:
- Leaving the Wft as is
Though there seems to be no consensus yet as to what shape a review should take, there does seem to be consensus among supervisory authorities and market participants that doing nothing is not the preferable course of action.
- Making minor legal-technical and
Keep the current cross-sectoral structure of the Wft intact, but adopt technical and editorial amendments to rectify or clarify provisions, and remove inconsistencies. In addition, improve the explanatory notes to the Wft. The consultation document does not specify which amendments are being considered.
- Making improvements within the
current Wft structure
Improve the Wft as it currently exists within the cross-sectoral structure. For example, bundle provisions on the governance and organisation of financial institutions (such as suitability and integrity, as well as sound and ethical business policies) that are currently in various Wft chapters as a result of the division between prudential supervision and conduct supervision.
- Introducing a sectoral approach
Organise the rules by category of financial institution, service or product. A major advantage of this option is that it would allow the Wft to tie in with the sectors as defined in EU legislation. A disadvantage is that this would involve a substantial overhaul of the Wft.
- Replacing the Wft with a number of
separate, sector-specific acts
Each category of financial institution, service or product would get its own legislation.
Through this consultation, the Minister also wants to assess the need for an English translation of the complete Wft, and for a guide or website which explains the legislation that applies to each sector.
The Dutch "twin-peaks model" of financial supervision, where the Dutch Central Bank (DNB) is responsible for prudential supervision, and the Netherlands Authority for the Financial Markets (AFM) for conduct of business supervision, will be maintained.
The five options outlined above are not set in stone; hybrids of the options could be considered as well. Financial institutions that want to express their views on the future direction of the Wft have until 1 March 2017 to do so.
De Brauw has been actively involved in conversations with the Ministry of Finance leading up to this consultation. We will closely monitor and update you on new developments concerning the Wft review.
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.