Yesterday the Amendment Decree Financial Markets 2014 (Wijzigingsbesluit financiële markten 2014, the “Amendment Decree”) was published. The Amendment Decree changes a number of governmental decrees that are inter alia based on the Financial Supervision Act (Wet op het financieel toezicht, “Wft”). The Amendment Decree extends the prohibition on commission that is embodied in the Market Conduct Supervision Financial Institutions Decree (Besluit gedragstoezicht financiële ondernemingen Wft).

Financial Service Providers

A prohibition on commission already applies (since 1 January 2013) to financial service providers with respect to the provision of advice and brokerage services of payment protectors, complex products, mortgage loans, individual disability insurance products, life insurance policies, funeral expenses insurances or products to be laid down in further regulation.

Investment Firms

The Amendment Decree extends the existing prohibition on commission and provides for a prohibition on commission for investment firms. An investment firm shall not provide or receive, directly or indirectly, any commission regarding the provision of an investment service or ancillary service to non-professional investors.

The prohibition will not apply to: (a) commissions that are paid directly by the client or a person that is acting on its behalf; (b) commissions that are necessary for the provision of the service or make the service possible, such as settlement and exchange fees, legal fees or statutory levies; (c) commissions regarding placement and underwriting of financial instruments, if the client has been properly informed and the commission benefits the service and does not affect the best interest of the client; (d) commissions that are paid by an investment firm to an agent that is committed to the investment firm and vise versa; or (e) business gifts, to the extent that the joint annual value does not exceed EUR 100.

Transitional Regime

It is expected that the Amendment Decree will enter into force on 1 January 2014. Investment services rendered before 1 January 2014 may lead to commission payments after that date and it shall often not be possible to convert financial instruments into a commission-free product. The prohibition on commission therefor will therefore not apply to investment services and ancillary services rendered before 1 January 2014 regarding transactions in financial instruments other than units in an investment institution or undertaking for the collective investment of transferable securities ("UCITS"), which are at the holder's request repurchased or redeemed, directly or indirectly, out of the assets of these undertakings.

Furthermore, the prohibition on commission for investment firms will not apply until 1 January 2015 to the provision of investment services and ancillary services regarding transactions in units in an investment institution or UCITS, which are at the holder's request repurchased or redeemed, directly or indirectly, out of the assets of these undertakings under the conditions that (i) the client has been properly informed, (ii) the commission benefits the service and does not affect the best interest of the client or (iii) the commission will be fully transferred by the receiving investment firm to the client. For these services the receiving or providing of commissions to or from third parties is permitted until 1 January 2015. This delayed effect gives investment firms more time to change to a commission-free service. The transitional regime will apply to most distribution fees and not to return commissions and acquisition fees.

The Authority for Financial Markets (Autoriteit Financiële Markten) has published a FAQ on this matter.