There have been many developments in national and European financial markets regulation during the past month. In this article we provide a brief overview of these developments.

Highlighted publications

Mortgage Credit Directive Implementation Act

On 22 March the Senate adopted the Mortgage Credit Directive Implemention Act. The Directive aims to bring about a well-functioning internal market for residential property credit agreements. The Directive includes:

  • rules to improve the financial education of consumers, and to strengthen the conditions that apply to lenders and credit intermediaries when providing credit, or acting as an intermediary when providing credit to consumers
  • rules on the creditworthiness and suitability assessments and access to databases, as well as rules on advice and foreign currency loans and variable rate loans
  • rules on the conduct of business when providing credit to consumers
  • regulation of credit intermediaries and non-credit institutions providing mortgage credit
  • rules on information to be provided to consumers (marketing and advertising, general information and personalised information regarding an offer)

An important consequence of the Act is that an offer made by a lender will now be considered a final offer. This means that the lender must have all the data necessary to perform the creditworthiness assessment prior to making the offer. After making the offer, the credit agreement cannot be terminated or amended to the disadvantage of the consumer by invoking an incorrect assessment of creditworthiness. This will change the way offers are presented to consumers.

By memorandum of amendments the Act prohibits banks from requiring consumers who obtain a mortgage credit to open a current account or a savings account with that same bank.

On 21 March 2016, the Directive should have been implemented by member states.

Currently the draft order in council implementing the Directive is with the Council of State for advice. The Minister of Finance has indicated his intention to publish the Act in the Bulletin of Acts and Decrees this summer.

UCITS V Implementation Act

On 18 March the UCITS V Implementation Act entered into force, implementing the UCITS V Directive in the Dutch Financial Markets Supervision Act. The most important changes relate to the remuneration policy for managers and the depositary function, including:

  • only a bank, an investment firm or other authorised legal entity subject to capital adequacy requirements can be an authorised depositary
  • a depositary is liable for the loss of financial instruments held in custody, unless it can prove that the loss was caused by external events beyond its reasonable control
  • a depositary is liable for the duties it has delegated
  • depositaries are subject to a licensing requirement

In addition to the Act, a Regulation and Decree implementing the UCITS V Directive have entered into force in March as well.

Financial markets Amendment Decree 2016

The Financial markets Amendment Decree 2016 was published in the Bulletin of Acts and Decrees on 16 March. The Decree includes:

  • a ban on inducements relating to premium pension claims
  • a ban for insurers to receive remuneration or compensation from investment firms or UCITS
  • changes to better facilitate crowdfunding platforms
  • changes to the procedures for obtaining diplomas and certificates regarding professional competence

The Decree entered into force on 1 April 2016. Article I, subsection S regarding the transitional period of the central Financial Markets Supervision Act examination will enter into force on 17 March, and applies retroactively as of 1 January 2016.

Exemption for crowdfunding platforms

In the Exemption Regulation under the Financial Markets Supervision Act, an exemption to the ban on attracting repayable funds has been included for crowdfunding platforms. The following conditions apply:

  • attracting repayable funds is not part of the core business of the natural or legal person attracting the funds
  • the funds may not be attracted with the goal of on-lending
  • attracting the repayable funds is done via an exempted crowdfunding platform
  • the total amount of repayable funds attracted over a twelve-month period must not exceed EUR 2.5 million

The Regulation entered into force on 1 April 2016. Furthermore, the Dutch supervisory authorities AFM and DNB have published additional suitability requirements which crowdfunding platform policy makers must comply with to be eligible for the exemption. With this strengthened regime, the supervisory authorities aim to better protect both creditors and debtors. The new rules are incorporated in the Policy Rule on Suitability 2012 and have retroactively entered into force on 1 April 2016.

Supervisory authority (AFM) clarifies conversion exemption

The conversion exemption applies when shares or depositary receipts are admitted for trading on a regulated market and result from the conversion of other securities. This applies, for example, in reverse listing cases. In specific situations, the AFM can declare that the exemption does not apply. An important factor the AFM looks at is whether investors have been adequately informed about the consequences of the placement or listing of these convertible securities.

The AFM has now published the principles it applies for determining whether the provision of information was adequate. When the AFM judges the information provided to be inadequate, an approved prospectus needs to be made publicly available.

Other publications

AFM

DNB

EBA

ECB

EIOPA

ESMA

Official Journal EU

Other