On 01 July 2016, the Netherlands Authority for the Financial Markets (AFM) imposed an administrative fine of €750,000 on BinckBank N.V. (BinckBank). BinckBank offers individual asset management under the name Alex Vermogensbeheer (Alex). The fine was imposed because advertising concerning Alex in the period from 08 September 2012 to 26 August 2014 included unclear and misleading information.
|States of the legal proceedings
|Fine imposed||Objection||Appeal||Further appeal|
|Submitted||Decision rendered||Submitted||Decisiion rendered||Submitted||Decision rendered
|01-07-2016||10-08-2016||28-12-2016 (1)||07-02-2017||20-02-2018 (2)||29-03-2018 (3)|
(1) The AFM has declared the objection against the fine unfounded while supplementing its reasons and upheld the penalty decision.
(2) In this judgment, the Rotterdam District Court declared BinckBank’s objection unfounded.
(3) BinckBank submitted further appeal.
Consumers must be able to rely on the fact that the information in advertisements concerning financial services is clear and not misleading. The AFM is authorised to take action if a financial undertaking misrepresents the facts. This protects consumers and prevents competitive advantages for financial undertakings that do not comply with the rules.
Unclear and misleading advertising
The AFM investigated 3 Alex advertising campaigns, which consisted of television advertisements and internet banners. The campaigns lasted a total of nearly 2 years. The investigated advertisements showed each time a realised cumulative return. The AFM investigation made clear that this return had been realised by only one specific portfolio with its own characteristics (referred to by BinckBank as an example portfolio). The advertisements are unclear because they did not indicate in any way that the return shown applied only to the example portfolio. The average cumulative return that had actually been realised by investors over the same period was structurally lower. The cumulative returns also had a large spread. The high return shown in the advertising was therefore misleading. And finally, the advertisements were also misleading because BinckBank incorrectly suggested a connection between its procedures and the return shown.
A fine of €500,000 may be imposed for this violation. This amount may be adjusted if the degree of culpability or the seriousness or duration of that violation are grounds for doing so. In the present case, the AFM submits a higher fine on BinckBank because the violation is very serious and there is a high degree of culpability.
The AFM considers that the degree of culpability of the actions of BinckBank is increased. BinckBank had a consultancy organisation perform an investigation prior to the start of the campaigns. The investigation showed that the cumulative return of the example portfolio clearly differed from the average return realised by clients and that the cumulative returns had a strong spread. BinckBank nevertheless started the campaigns and did not keep a finger on the pulse to see how the example portfolio was developing when compared to the actual investor portfolios.
The information submitted by BinckBank showed that the number of investor portfolios grew considerably during the campaign that lasted almost 2 years. The AFM considers that, in view of the duration and positive effect for BinckBank at the expense of confidence in the market, an increase of the fine in connection with the seriousness and duration of the violation is appropriate.
BinckBank's size and financial capacity are no reason for the AFM to reduce the fine.
The AFM considers a fine of €750,000 appropriate in view of the offence.
Interested parties can submit the AFM's decision to the courts for review. If you have any questions or comments, please contact the AFM 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.