Annual report 2006
On Wednesday 4 April 2007, the Netherlands Authority for the Financial Markets (AFM) presented its 2006 annual report. At the press conference, Executive Board members Arthur Docters van Leeuwen, A.W. Kist and Paul Koster, and directors Steven Maijoor and Harman Korte each provided a brief explanation of various current topics in the field of market conduct supervision. Those presentations are summarised below.
Arthur Docters van Leeuwen, as Chairman of the AFM, spoke about the great importance of approaching supervision of the financial markets at the European level. He referred to the large number of new Directives issued by the European Commission, on which he has advised the Commission during recent years in his capacity as Chairman of the Committee of European Security Regulators (CESR). Although most of those regulations have been implemented in national legislation, he emphasised that important developments are still underway at the European level in the areas of transparency, clearing & settlement and corporate governance.
Paul Koster concentrated primarily on the need to reconcile the accounting rules on both sides of the Atlantic, in light of the increasing ties between market players from Europe and from the United States. As an example, he mentioned the merger between the NYSE and Euronext. He also announced that the AFM is not in favour of there being additional standards besides IFRS after 2009.
A.W. Kist addressed the problems surrounding investment policies. In connection with this, he qualified 2007 as the year of truth for Dutch insurance companies, which are currently investigating the situation for all investment products and for all clients concerned to determine whether there are any deficiencies, such as were previously discovered by the AFM among a number of providers of such policies. The AFM is conducting a study across the entire market into current practices for concluding new investment insurance policies, with one of the areas of attention being the duty of care. The results of those studies are expected to be available in June.
Director Steven Maijoor explained the current situation surrounding the relatively new supervision of auditors’ organisations. Since October 2006, the AFM’s duties have included reviewing licence applications, with the primary focus lying on the quality control systems of accounting firms. The studies currently being conducted at the small and medium-sized accounting firms show that small firms that carry out few, if any, statutory audits have particular difficulty complying with the legal requirements.
Director Harman Korte provided a report on the supervision of credit advertising on television. During the past 12 weeks, the AFM has reviewed 172 television commercials for compliance with the relevant requirements. Advertisements for credit may not be misleading, and if they mention interest rates or monthly costs they must also provide information about such matters as the total price of the credit, the credit amount or the maximum credit limit that may be withdrawn. One-third of the commercials were not compliant, and the nine parties that together were responsible for those advertisements were called to account. Many of the commercials were altered following the communications with the AFM. The AFM will continue to closely monitor television advertisements for credit during the coming period.