On 29 October 2012 the VVD (the Liberal Party) and the PvdA (the Labour Party) presented the coalition agreement for the envisaged new cabinet. The coalition agreement contains proposals for changes to the financial sector that the two parties have agreed upon. Although the coalition agreement does not contain detailed proposals for amendments to the law, the topics set out therein do provide a good overview of the direction of the new cabinet. Please find below a short overview of the main proposals with respect to financial regulatory law:
- Further maximisation of performance related remuneration
The coalition agreement provides that the performance related remuneration for the financial sector shall be capped by law at 20% of the fixed remuneration.
- Sanctions for violating banker's oath
With the entering into force of the Financial markets amendment Act 2013 as of 1 January 2013 (we refer to our previous update on the amendments), employees of financial enterprises (such as banks, insurance companies, financial service providers and investment firms) must take an oath or solemn affirmation. In the coalition agreement it is proposed to set strict sanctions for the violation of this oath contained therein.
- Screening of bank employees by AFM/DNB
Currently, managing board members and members of the supervisory board of financial enterprises are screened on expertise suitability and trustworthiness by the Authority for Financial Markets or the Dutch Central Bank. The coalition parties now propose that bank employees responsible for high risk transactions are screened as well.
- General duty of care
The coalition agreement provides that a general duty of care for banks will be given a legislative basis. This is in line with a consultation published by the Ministry of Finance on 20 September of this year (we also refer to our update on this consultation). The coalition agreement expressly states that products that are not in the interest of the customer may not be sold.
- Speculation with public funds
According to the coalition agreement it will be prohibited for entities that are (partially) funded with public funds to speculate with complex financial products. It will however continue to be allowed to hedge interest rate risks. Compliance with this prohibition must be monitored with the audit of the annual accounts. With respect to housing associations, the Dutch Minister of the Interior and Kingdom Relations published policy rules for the use of derivatives earlier this year (we refer to our update on this policy rule).
- Accelerated implementation buffer for systemically relevant banks
The implementation of the buffer that must be maintained by banks that are designated as systemically relevant (as provided for in CRD IV), will be accelerated. The exact timing is not provided for in the coalition agreement.
- Alternative financing
In the coalition agreement it is proposed to eliminate legislative hurdles for new and alternative means of financing. Examples of such means of financing are credit unions, crowdfunding and SME-bonds.