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The AFM imposes an administrative fine on Friesland Bank N.V. for issuing advice concerning term life insurances

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The Netherlands Authority for the Financial Markets has imposed an administrative fine of €250,000 on Friesland Bank N.V. (Friesland Bank) for failing to obtain sufficient information when issuing advice on term life insurances. Those insurance products were concluded when taking out a mortgage loan and were intended to offer consumers coverage against a loss of income in the event of the death of the partner.

Friesland Bank was acquired by Rabobank Nederland after the date the fine was imposed. Friesland Bank has been a 100% subsidiary of Rabobank Nederland since 1 April 2012. Friesland Bank operated entirely independently at the time the fine was imposed.

The fine, which was imposed on 21 July 2011, was lowered from €500,000 to €250,000 by decision on the objection of Friesland Bank.

The AFM investigated a total of five files from the period of 1 September 2009 to 1 April 2010. In all five investigated files Friesland Bank failed to obtain sufficient information concerning the financial position and the objectives of consumers. In three files Friesland Bank failed to obtain sufficient information concerning the consumers' willingness to accept risk. Friesland Bank was consequently unable to base its advice partly on this information.

The Financial Supervision Act (Wft) obliges financial undertakings to issue suitable advice to consumers. They are therefore required to obtain information, inter alia, concerning the consumer’s financial position, objectives and willingness to accept risk and to take this into account when issuing advice. This ensures that they act in the interest of the client.

The new Fine Act (Fine Scheme in Financial Legislation (Amendment) Act) entered into effect on 1 August. This Act applies because the violations took place after 1 August 2009. The basic amount for violation of Article 4:23(1) at a and b of the Wft amounts to €500,000. This new fine legislation applies because the violations took place after 1 August 2009. The amount of the fine would have been €24,000 under the old fine legislation. It cannot be deduced from the higher fines imposed by the AFM on the basis of the new legislation that the AFM considers these violations more serious than the violations that were fined with lower amounts under the old legislation.

The fine has become final as no objection or appeal can be submitted against the decision anymore.

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.

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