Update: 16 April 2012: the decision of the AFM has become irreversible by law. There is no possibility of filing an objection or appeal against the decision.
On 28 February 2012, the Netherlands Authority for the Financial Markets (AFM) imposed an administrative fine of €500 on Cormat Finance B.V. (Cormat Finance), at the time trading under the name Huis & Hypotheek Bergen op Zoom, for providing unsuitable advice when concluding mortgage loans and insurance products.
The Financial Supervision Act (Wft) obliges financial undertakings to issue suitable advice to consumers. They are therefore required to obtain information on the consumer and take this information into account when providing advice. This will ensure that they act in the interest of the client.
The AFM selected a total of ten files, from which it investigated five files from the period of 14 August 2009 to 23 October 2009. The investigated files were partly selected because they involved remortgaging and/or exceeding the GHF standard.
In the investigated files, Cormat Finance failed to obtain sufficient information concerning the financial position, objectives, willingness to accept risk and the knowledge and experience of consumers. As Cormat Finance failed to obtain sufficient information from its clients, it was consequently unable to base its advice in part on this information. It is the AFM's opinion that Cormat Finance, in doing so, acted contrary to Article 4:23, first paragraph, at a and b, of the Wft.
In addition, in the investigated files Cormat Finance acted contrary to Article 4:23, first paragraph, at b, of the Wft. The GHF standard was exceeded in two files without a proper substantiation of this deviation. Deviations from the income standards are only allowed if there are good financial reasons for doing so and these also have to be recorded in the advice file.
In these files, Cormat Finance also used income declarations in which it entered a higher income than the client actually enjoyed. For example, Cormat Finance incorrectly included certain income, such as notional return from a residence, a tax benefit and a non-substantiated annual gift, in the (qualifying) income. This means that clients received a mortgage that is not in line with their financial situation and that they are confronted with excessive expenses when compared with their income.
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 took into account the seriousness and duration of the violation, culpability and Cormat Finance's financial capacity.
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: 0800-5400 540 (free of charge).
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