On 3 April 2009, the Netherlands Authority for the Financial Market (“AFM”) imposed an administrative penalty of € 6.000 on Topdon B.V. (“Topdon”), because Topdon failed to obtain sufficient information when it issued advice on mortgage loans and life insurance. The violations were identified during the market-wide investigation into mortgage advice conducted by the AFM in 2007.
A consultant is required to obtain information from a client concerning its financial situation, knowledge, experience, objectives and willingness to accept risk. This information is necessary to issue advice that is suitable to a client's specific situation.
The AFM investigated a total of seventeen instances where Topdon issued advice. During the period of January 2007 to October 2007, a total of fourteen violations were identified in nine instances where Topdon gave advice. Topdon failed to obtain sufficient information concerning the client's willingness to accept risk during the accrual of the intended funding capital in eight instances where Topdon gave advice on mortgage loans. One advice was not based on the objective of the intended funding capital. One advice was not in line with the expressed willingness to accept risk. Topdon failed to obtain sufficient information on the desired risk coverage in the event of death in four instances where Topdon gave advice concerning life insurance.
Failure to obtain sufficient information, or failure to base its advice on this information, means that Topdon did not provide suitable advice and this constitutes violation of Section 4:23, first subsection, of the Act on Financial Supervision ("Wft").
If you have any questions or comments you can contact the Financial Markets Information Line of the AFM on: 0900 - 5400 540 (0.05 euro per minute) or from abroad +31 20 797 3715.
The AFM promotes fairness and transparency within financial markets. We are the independent supervisory authority for the savings, lending, investment and insurance markets. The AFM promotes the conscientious provision of financial services to consumers and supervises the honest and efficient operation of the capital markets. Our aim is to improve consumers’ and the business sector’s confidence in the financial markets, both in the Netherlands and abroad. In performing this task the AFM contributes to the prosperity and economic reputation of the Netherlands.
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