The Netherlands Authority for the Financial Markets AFM) is pleased to see the amendment to the code of conduct by the Dutch Association of Financial Advisers [Nederlandse Vereniging van Financieringsadviseurs, or NVF] with regard to advisory fees for additional insurance policies. In its code of conduct, the NVF has reduced the maximum fee for the entire advisory process with regard to payment protection insurance for consumer credit (policies to cover death, disability and unemployment risk) from €1500 to €500. The AFM sees this as a positive and very welcome step in combating hidden intermediation fees for consumer credit.
Charging consumers a fee for the intermediation of consumer credit is prohibited under Section 4:74 of the Financial Supervision Act. This provision is intended to protect consumers from attempts to generate sales by credit intermediaries. A credit intermediary may only be remunerated in the form of an ongoing or one-off commission from the credit provider. This is contrary to the situation of intermediaries in various other complex products, such as mortgages, who will be subject to the prohibition of commissions soon to be introduced.
Maximum of €500
Despite the prohibition of direct remuneration by the consumer, the AFM notes that there are credit intermediaries operating who impose a hidden charge in the form of an inappropriate advisory fee for additional payment protection insurance. Intermediaries in consumer credit should charge a realistic fee for advice regarding possible additional insurance policies only when the consumer needs this advice. The NVF has reduced the maximum fee in its code of conduct to €500. The actual fee must indeed at all times reflect the work involved in the insurance consultation.
With this amendment, the NVF has made a positive contribution towards the purpose of the AFM’s supervision: the promotion of a fair and transparent market for consumer credit. The AFM will continue to devote the necessary attention to active supervision of the market for credit intermediaries, and has recently brought these practices to an end at various market parties.
Advice to consumers
The AFM advises consumers to carefully check the fees that may be charged before entering into a relationship with a credit intermediary. No fee may be charged for intermediation regarding a loan. Additional insurance policies are not compulsory, and advice in this respect costs money. It is therefore wise to always consider whether such advice is really necessary. Signals, notifications or complaints regarding fees for credit intermediation should be notified to the AFM Financial Markets Contact Point (Meldpunt Financiële Markten) on 0900-5400 540 (€0.05 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.
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.