Better communication required to prevent misunderstandings about special credits management

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The Netherlands Authority for the Financial Markets (AFM) has performed an exploratory survey among the special credits department of banks that handle credit for small and medium-sized entities. This survey did not present any indications that banks disadvantage SME's in a structural manner where special credits management is concerned. However, the information about special credits management is generally lacking, which means that entrepreneurs are often insufficiently aware of what to expect. It is often unclear to SME's how a bank takes account of their interest when implementing measures. The client and the bank have different expectations as regards the purpose of special credits management.


The many complaints received by the AFM from entrepreneurs were the reason for this survey. Entrepreneurs are dissatisfied with the transfer to special credits management, the measures implemented by special credits management, the manner in which they are approached and the extent to which the bank is willing to (continue to) provide financing, as is evident from these reports. The AFM wanted to determine by means of its survey to what extent these complaints are representative of the daily course of affairs at special credits departments.

No unreasonable measures

The AFM has not been able to determine that banks are too quick to transfer credits to special credits departments or terminate credit relationships, or that they aim for bankruptcy. The AFM found no unreasonable measures, such as disproportionate risk surcharges, in the files it investigated.


The AFM concludes that the clients' expectations about the purpose of special credits management are often not in line with what they experience in practice. Banks mainly use special credits management to control the credit risk. The measures they implement for this purpose, which often lead to increased costs for entrepreneurs, are experienced as obstructive and unjustified by the entrepreneurs.

The AFM considers it understandable that banks take measures to limit the credit risk. It is very important, however, that they take account of the possibilities of recovery of businesses when doing so. A bank is not obliged to provide additional credit, but it could be in the joint interest of the bank and the client if this contributes to a realistic chance of recovery.

Better communication

Clear communication helps prevent misunderstandings. Through clear communication, entrepreneurs will not be confronted with accomplished facts after the fact. Clear provision of information and communication are therefore in the interest of both the client and the bank.

Banks should announce a possible transfer to special credits management at an earlier stage and better substantiate their reasons. After such a transfer, banks could also better prepare their clients by providing a clear explanation about the purpose and procedure of special credits management. It must be clear what choices are made by the bank at different moments and how the client can influence this process.

It is crucial that banks provide more insight into their considerations in order to prevent the appearance of arbitrariness. They have to show clients that they take the client's interests into account when they impose measures. When cost-increasing measures are imposed, these should also be explained in a clear manner.

Responsibility of the client

Banks have a great responsibility to take account of the interests of entrepreneurs, also within the context of special credits management. However, entrepreneurs have a responsibility as well. Clients may be expected to enable the banks to provide custom services.

This means that they should carefully study the conditions of the credit agreement, keep accurate records and adequate management information, report any problems in a timely manner, draw up a plan of approach for the recovery of their business operations, and can be contacted by the banks. It may also be advisable for clients to lay down agreements with the bank and to report any complaints to the bank and the AFM.

What next?

The banks involved have indicated that they will get to work on these issues. The AFM expects that the banks will implement the necessary measures expeditiously, and it will monitor progress.

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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