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Policy Rule on Suitability has entered into effect

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The Policy Rule on Expertise was amended effective 1 July pursuant to the entry into effect of the Act Introducing Suitability Requirements. The policy rule will be referred to as the Policy Rule on Suitability 2012 from now on. The AFM and the DNB introduce several minor amendments by means of the adjustment of the policy rule. The AFM and DNB will perform a comprehensive, joint evaluation of the Policy Rule on Suitability 2012 in the autumn of 2012. The experiences of the supervisory director assessments that are currently being performed will be included in this evaluation.

The Policy Rule on Suitability 2012 clarifies what the supervisors understand 'suitability' to mean and what aspects are taken into consideration when assessing a policy-maker. As of 1 July 2012, both day-to-day policymakers and members of the internal supervisory body of financial undertakings have to be suitable for holding their position.

The most important changes when compared with the Policy Rule on Expertise 2011 are:

Amendment of the terminology of the Act Introducing Suitability Requirements that will enter into effect on 1 July 2012. The expertise requirement is replaced by a suitability requirement. The introduction of this suitability requirement does not comprise any substantive amendment. The term 'expertise' is replaced by 'suitability'. This new term consists of the same components, namely 'knowledge', 'skills' and 'professional conduct'.

As of 1 July 2012, all insurers are classified in Group A. The AFM and DNB have observed in practice that the criteria on the basis of which executive directors (and supervisory directors) of funeral insurance companies with in-kind benefits and mutual insurance associations with a declaration are assessed in Group C, does not enable them sufficiently to form an opinion of the suitability of the person to be assessed. That is why it was decided to transfer both types of financial undertakings to Group A. In this Group A, it is possible to assess a person's suitability on the basis of principle-based criteria.

The Policy Rule on Suitability 2012 clarifies that policymakers from Group C can also be assessed on the basis of the requirements provided for in Chapter 1. The AFM and DNB has observed that the current rule-based assessment of executive directors (and supervisory directors) of institutions from Group C in the case of entering the market does not enable them sufficiently in some cases to form an opinion of the suitability of the person to be assessed. The Policy Rule of Suitability 2012 therefore expresses more clearly that financial service providers may also be assessed on the basis of the requirements that are set in Chapter 1, if there is reason to do so.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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