On 23 May 2012, the Netherlands Authority for the Financial Markets (AFM) imposed two administrative fines on Consumenten Advies Centrum BV (CAC). The fines were imposed for (1) misleading commercial practices and for (2) issuing unsuitable advice concerning consumer credit and payment protectors.
1. The AFM imposes an administrative fine on Consumenten Advies Centrum BV for misleading commercial practices
On 23 May 2012, the Netherlands Authority for the Financial Markets imposed an administrative fine of €50,000 on Consumenten Advies Centrum BV (CAC) for performing misleading commercial practices. This constitutes a violation of the Consumer Protection (Enforcement) Act. In the period between 25 February 2010 and 4 March 2010, CAC did not inform consumers of the costs of the insurance advice and the home visit in five of the six investigated files until the time when the home visit took place. These payments were also owed if no insurance was purchased.
The clients took out consumer credit via CAC in all six investigated files. In addition, CAC issued insurance advice to these clients. Clients were charged €450 for each instance of insurance advice and another €900 for the home visit. In two of the six investigated files, CAC charged an amount of €4,950 for nine instances of insurance advice and a home visit, even though these clients did not purchase any insurance.
In the five investigated files in which violations were identified, CAC charged a total amount of €18,000. It was established that in four of the six files, the relevant clients were charged costs for advice concerning insurance that these clients had already taken out.
A financial service provider acts wrongfully if it provides essential information late, which means that an average consumer makes or could make a decision concerning the service offered that he would otherwise not have made. Information on the costs of financial services can be classified as essential.
The maximum fine for violation of Article 8.8 Whc amounts to €450,000. When determining the amount of the fine, the AFM included in its considerations the seriousness and duration of the violation, culpability and the financial capacity of CAC and the other circumstances in which the violation was committed.
CAC has been in a state of bankruptcy since 29 June 2011.
Interested parties may submit the AFM's decision to the court for evaluation. If you have any questions or comments you can contact the Financial Markets Information Line on: 0900-5400 540 (5 eurocents per minute).
2. The AFM imposes an administrative fine on Consumenten Advies Centrum BV for issuing unsuitable advice concerning consumer credit and payment protectors
On 23 May 2012, the Netherlands Authority for the Financial Markets imposed an administrative fine of €31,250 on Consumenten Advies Centrum BV (CAC) for unsuitable advice concerning the conclusion of consumer credit agreements and payment protectors. CAC is a financial service provider that brokers, inter alia, mortgage loans and payment protectors. A payment protector (also known as: credit protection insurance) covers the risk that the consumer is unable to comply with payment obligations pursuant to a loan agreement, for example as a result of occupational disability or unemployment.
The AFM has identified violations in all 6 investigated CAC client files dated from the period of 2 February 2010 to 29 April 2010. In all 6 files, CAC recommended, in addition to consumer credit, also one or more payment protectors. When advising on a consumer credit and payment protectors, CAC failed to obtain information or obtained insufficient information concerning the consumer's financial position, objective(s), willingness to accept risk, knowledge and/or experience.
The AFM has established that, based on the information in the files, it cannot be determined that the conclusion of the loan and/or the payment protector was in the interest of the consumer. For example, it has not become clear from any of the six investigated files, in which advice was issued concerning unemployment insurance, disability insurance or term life insurance that information was obtained concerning the question of whether or not there were other options to deal with any loss of income experienced by the client. In one client file, it did not become clear whether CAC obtained any information at all concerning the financial position, objectives, willingness to accept risk and the knowledge and experience of the client. As CAC did not obtain sufficient information from the consumer, it was consequently unable to base its advice partly on this information.
This means, in the opinion of the AFM, that CAC acted in violation of Article 4:23, first paragraph, parts a and b, of the Financial Supervision Act (Wft). The Wft obliges financial enterprises to provide consumers with appropriate advice. They are therefore required to obtain information concerning the consumer and to base the advice (in part) on this information.
The Penalty Scheme in Financial Legislation (Amendment) Act (new penalty act) and the Decree on Administrative Fines in Financial Legislation (Decree on Administrative Fines) entered into effect on 1 August 2009. The new penalty act and the Decree on Administrative Fines in Financial Legislation apply as the violation commenced after 1 August 2009. The basic amount for violation of Article 4:23, first paragraph, of the Wft amounts to €500,000. When determining the amount of the fine, the AFM included in its considerations the seriousness and duration of the violation, culpability and CAC's financial capacity.
CAC has been in a state of bankruptcy since 29 June 2011.
Interested parties can submit the AFM's decision to the courts for review. If you have any questions or comments you can contact the Financial Markets Information Line on: 0800-5400 540 (free of charge).
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.