On 23 March 2011, the Netherlands Authority for the Financial Markets (AFM) imposed an administrative fine of € 50,000 on De Financiële Dienstverleners B.V. (DFD) for providing unsuitable advice when concluding investment-linked insurance (life insurance).
The Financial Supervision Act (Wft) obliges financial undertakings to provide consumers with suitable advice. They are therefore required to obtain information on the consumer and take this information into account when providing advice. In doing so, they act in the interest of the client.
The AFM investigated a total of twelve DFD files from the period 1 August 2009 to 17 March 2010. DFD failed to obtain sufficient information concerning the financial position, objectives, willingness to accept risk, and the knowledge and experience of consumers, with respect to all the investigated files. DFD was consequently unable to base its advice on this information. In addition, in two files DFD did not take the details into account that actually had been obtained. It is the opinion of the AFM that DFD in doing so acted contrary to Article 4:23(1), parts a and b, of the Wft.
When determining the amount of the fine, the AFM took into account the seriousness and duration of the violation, culpability and financial capacity of DFD.
The AFM notes that the Penalty Scheme in Financial Legislation Amendment Act and the Administrative Fines in Financial Legislation Decree? (new fines legislation) entered into effect on 1 August 2009. The Dutch legislator has significantly increased the fine amounts for violation of, inter alia, Article 4:23(1), parts a and b, of the Wft, in the fines legislation. The new fines legislation applies because DFD's violations occurred after 1 August 2009. It cannot be concluded from the increased fines imposed by the AFM on the basis of the new fines legislation that the AFM considers these violations more serious than the violations that were subject to lower fines under the old legislation.
Interested parties can submit the AFM's judgment contained in the decision to the competent court for review.
If you have any questions or comments you can contact the Financial Markets Information Line on: 0900-5400 540 (5 eurocents per minute). 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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