The use of client data must be safe and in the interest of the client

Banks and insurers have to consider whether their use of client data is in the interest of the client. They also have to consider whether they are able to guarantee the security of client data. This was said by AFM director Theodor Kockelkoren on Wednesday in the House of Representatives during the 'use of client data by banks' round-table meeting. The AFM is closely monitoring this development, because there is important overlap with client interests and consumer confidence in the financial sector.

The use of client data by banks is a sensitive issue for clients. The AFM has therefore issued a call to all banks in March to engage with society concerning the commercial use of client data. The banks have since responded to this appeal.

"The main challenge for the financial sector in the coming years is to build up a culture of security and honesty", stated Kockelkoren. "Clients want to see that their banks and insurers act honestly, including when it comes to their personal data. The risks and opportunities involved in the commercial use of client data depend strongly on the manner in which client data are used".

According to the AFM director, it is primarily up to the banks and insurers to properly chart the potential risks of the use of client data for each situation and to communicate about this to the client in an open and honest manner. The supervisor will be alert to possible unfair treatment of clients. Kockelkoren: “The use of client data could lead, for example, to a person being required to pay a higher premium for an insurance if the financial institution sees that he spends too much on matters that are unhealthy or financially irresponsible. By contrast, you could also ask yourself whether granting someone a discount for what the financial institution considers to be a healthy lifestyle is not a form of discrimination."

It is obvious that banks and insurers first discuss these matters with their client before drawing any conclusions in respect thereof. They are naturally required to ask the client's permission to use the data.

"In this connection, banks and insurers must focus at all times on the client's interests. Moreover, they must establish what expectations the clients have of the use of such data." Kockelkoren argued that banks and insurers must also consider granting their clients access to their own client data. This will make it easier for clients to obtain advice concerning financial products from several financial service providers; for example, they can bring an inventory that has already been drawn up to another service provider and thus purchase products from various financial service providers.

In response to questions from Members of the House of Representatives, Kockelkoren indicated that there is no sharp distinction at financial undertakings between advice and product. The supervisor is alert where it concerns the manner in which client data are used, for example with a view to advice or with a view to developing a new product. The general duty of care may also play a role in future.

Any new organisations that enter the Dutch payment market, such as Google and Facebook, must naturally also comply with Dutch regulations, Kockelkoren emphasised.

The AFM promotes fairness and transparency within financial markets. We are the independent supervisory authority for the savings, lending, investment and insurance markets. We promote the fair and conscientious provision of financial services to consumers and private investors, as well as professional and semi-professional parties. We supervise the fair and efficient operation of the capital markets. Our aim is to improve consumers’ and companies' confidence in the financial markets, both in the Netherlands and abroad. In performing this task, the AFM contributes to the stability of the financial system, the economy and the reputation and prosperity 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.

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