The AFM has imposed two administrative fines on DSB Bank N.V.Violation of Article 115 of the Decree on Conduct of Business Supervision of Financial Undertakings under the Wft (Bgfo)
On 5 May 2009, the Netherlands Authority for the Financial Markets (AFM) imposed an administrative fine of € 96,000 on DSB Bank N.V. The administrative fine was imposed because DSB Bank N.V. applies assessment criteria, during the assessment of mortgage applications, that have not been laid down to prevent the provision of excessive loans and that are not intended to prevent the provision excessive loans.
In the opinion of the AFM, DSB Bank N.V. has violated Article 115(1) of the Bgfo. This Decree obliged credit providers to lay down criteria that are at the basis of the assessment of a consumer's loan application in order to prevent the provision of excessive loans, and to apply those criteria in the assessment of a loan application. A credit provider's acceptance policy should focus on the prevention of the provision of excessive loans to consumers.
DSB Bank N.V. applies the CHF standard as acceptance policy. If a loan application is not in accordance with the CHF standard, DSB Bank N.V. applies additional criteria to assess whether the loan application can still be granted despite the fact that it exceeds the CHF standard. If the loan application does not meet with the additional criteria either, authorised DSB Bank N.V. employees can apply two further criteria, namely whether the deviation is 'marginal' or whether it is 'in any other way unreasonable towards the client to follow the memorandum of credit strictly and to the letter'. According to the AFM, the relevant criteria offer the authorised employees every opportunity to grant considerable and high-risk loans as they see fit, because the relevant criteria have not been elaborated sufficiently. The system of criteria is therefore not laid down to prevent the provision of excessive loans and not intended to prevent the provision of excessive loans.
Interested parties may submit the AFM's decision to the court for evaluation.
Violation of Article 4:23 Wft
On 5 May 2009, the Netherlands Authority for the Financial Markets (AFM) imposed an administrative fine of € 24,000 on DSB Bank N.V. This fine was imposed because in several cases DSB Bank N.V. failed to obtain sufficient information from the consumers it advised concerning the consumer's objectives and willingness to take risks. In addition, in several cases DSB Bank N.V. failed to base its advice sufficiently on the information that it did obtain.
In 5 out of the 34 investigated client files, the consumer indicated on the one hand that he does not want any changes in the monthly obligations as a result of interest fluctuations and, on the other hand, the fact that lower monthly obligations are the main reason for applying for the loan. With respect to its advice, DSB Bank N.V. should have enquired further whether the consumer's priority lies with a longer fixed-interest period or with lower monthly obligations. DSB Bank N.V. did not conduct those further enquiries. DSB Bank N.V. furthermore failed to include a repayment provision already held by the consumers in its advice to implement further provisions for repayment of the mortgage with respect to two consumers.
This means that DSB Bank N.V. has violated Article 4:23, first paragraph, of the Act on Financial Supervision. This Article obliges financial undertakings that advice consumers to, inter alia, obtain information on the consumer's financial position, knowledge, experience, objectives and willingness to accept risk in the interest of that consumer and to the extent reasonably relevant to the advice. The financial undertaking must ensure that the advice, to the extent reasonably possible, is also based on the information to be obtained.
Interested parties can submit the AFM's decision to the courts for review.
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