Financial service providers

The Act on Financial Supervision [Wet financieel toezicht] (Wft) came into effect on 1 January 2007. The Wft replaces 7 supervision Acts, including the Financial Services Act [Wet financiële dienstverlening] (Wfd). With effect from 1 January 2007, all financial service providers need a licence based on the Wft.

The meaning of the term ‘financial service provider’ is the same as in the Wfd. A financial service provider is the party that provides a financial product other than a financial instrument (this therefore includes banks and insurers), or that advises, mediates (including in respect of reinsurance), or acts as an authorised agent granted a power of attorney or an authorised agent granted a sub-power of attorney.

An advisor in financial instruments that also provides investment services is not only designated an investment firm, but also a financial service provider. Investment firms that advise on financial instruments therefore fall into the category of financial service providers. The Wft Exemption Regulation entirely or partially excludes a number of financial service providers from compliance with the Wft rules.

The Wft consists of six parts: General, Market Access for Financial Enterprises, Prudential Supervision of Financial Enterprises, Supervision of the Conduct of Financial Enterprises, Supervision of Financial Markets and Supervision of Clearing and Settlement Systems. The part on Supervision of Clearing and Settlement Systems will be added to the Act at a later date.The part on the Supervision of the Conduct of Financial Enterprises in the Wft contains rules which financial enterprises have to observe when providing their services, such as the rules for informing consumers (transparency) and the financial enterprises’ duty of care.The supervision is focused on orderly and transparent financial market processes, integrity of relations between market players and due care in the provision of services to clients. On the basis of the Wft, the task of the Authority for the Financial Markets is to supervise financial markets and to take decisions relating to the admission of financial enterprises to those markets. The following are a number of relevant issues within the framework of the Wft.