Joint enforcement policy of Netherlands Authority for the Financial Markets and Dutch central bank

The Netherlands Authority for the Financial Markets (AFM) and the Dutch central bank (DNB) readopted their joint enforcement policy on 10 July 2008. That policy incorporates a number of basic principles that these organisations will bear in mind when carrying out their supervision duties. It also specifies certain factors that go towards deciding on whether to apply a certain enforcement measure.

The AFM and the DNB monitor compliance with the relevant legislation and regulations. The two supervisory bodies have redefined a number of basic principles for the application of their statutory powers and enforcement methods.

The main principle is that supervision will focus on activities that do not comply with the set standards. Action will therefore basically be taken as soon as the supervisory bodies become aware of a contravention. Their joint policy is that no contraventions should be permitted. They go on to say that enforcement will in any case focus on causing the contravention to cease and/or on preventing any further contravention or any repetition. The enforcement measure to be applied will be determined according to the particular situation.

The enforcement policy also deals with the various enforcement methods, for example the imposition of an administrative fine together with publication of an announcement that this has been done. Basically, enforcement will be in accordance with the provisions of administrative law, but in certain circumstances a report will be made to the Public.

The policy pursued by the two supervisory bodies provides that Prosecutor fines or incremental penalties for noncompliance, will basically be published in accordance with the provisions of the Financial Supervision Act. Pursuant to that legislation, the only occasion when publication will not take place is if it would be contrary to the objective of the supervision exercised by the supervisory body. Pursuant to the policy, there will basically be no reason for the AFM not to publish notification of the imposition of a penalty. Matters are different where the DNB is concerned. The DNB will decide on a case-by-case basis, considering the potential impact of publication and the potential harm that may be done to confidence in the financial sector.

The AFM/DNB enforcement policy also refers to a variety of circumstances and interests that are relevant to determining whether a particular method of enforcement should be utilised. These include whether the contravention has been repeated, the extent to which it is imputable, and the extent to which the party concerned has benefited from the contravention.

For more information, please contact Arno Voerman, Market Group Financial Institutions.

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