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Administrative fine

If the AFM establishes that an offence has taken place, it can impose an administrative fine on the offender. Its powers to do this are based on various acts of parliament, most notably the FinancialSupervision Act (Wet op het financieel toezicht, or Wft), the Pensions Act (Pensioenwet), the Consumer Protection (Enforcement) Act (Wet handhaving Consumentenbescherming), and the Audit Firms (Supervision) Act (Wet toezicht accountantsorganisaties).

When a supervisory division of the AFM detects an offence, it may decide to pass the case to the officer responsible for administrative fines at the AFM. This officer does not investigate the case himself. He advises the Executive Board of the AFM as to whether a fine should be imposed and the amount thereof.

Prior to giving this advice, the officer sends a notification to the offender, regarding the intention to impose a fine. In this notification of intention, the officer states the offence for which a fine may be imposed. The offender is thereby given the opportunity to state his views. After the offender’s views have been heard, the officer advises the Executive Board of the AFM as to whether a fine should be imposed or not, and also regarding the amount of the fine and its publication.

Publication of the imposition of an administrative fine

The basic principle of the Wft is that all administrative fines are, ultimately, to be published, unless publication is or could be in conflict with the supervision to be exercised by the AFM regarding compliance with the Wft. The timing of publication depends on the offence. An administrative fine for a serious offence (category 3, or if the offence is so designated by law) has to be published without delay, meaning within five business days after the date on which the decision to impose an administrative fine has been notified to the offender. During these five days, the party concerned can apply for provisional relief.

This allows an interested party to prevent publication of the fine after five business days. For minor offences, initial publication is delayed until the decision to impose an administrative fine has become final (unchallengeable in law).

Legal protection against the administrative fine and publication

An objection against the imposition of an administrative fine can be filed with the AFM. If the AFM does not uphold the objection (the objection is declared to be without foundation), there is the option of appeal to the courts. After this, there is an option for further appeal to the Trade and Industry Appeals Tribunal [College van Beroep voor het bedrijfsleven, or CBb]. If the CBb rejects this further appeal, the administrative fine is final.

Pilot for accelerated fine procedure

The accelerated fine procedure means that the fine process is accelerated in the interest of all parties. An offender may, subject to certain conditions, qualify for these accelerated proceedings. The AFM board decides whether that is the case.

Ban on providing brokerage services and exemption notification

The Financial Supervision Act (Wft) provides that it is prohibited to provide brokerage services with respect to financial products, other than financial instruments. This can be read in the first paragraph of Article 2:80.

Providers of investment products that do not come under AFM supervision as the result of an exemption are required to warn investors thereof in, among other things, advertisements and on their websites. For this purpose, a special mandatory image is to be used: the so-called notification of exemption. This can be read in the Exemption Regulations under the Financial Supervision Act. The exemption threshold was raised on 1 January 2012 from €50,000 to €100,000 per investment product.

What does the accelerated procedure comprise?

During the accelerated procedure, the offender does not dispute the facts and the legal assessment of the facts, and he cooperates voluntarily in the accelerated settlement of the fine procedure. The offender will receive a 30% discount on the amount of the fine to be imposed, and the AFM will state – together with the publication of the fine – that the offender participated in the Pilot for an Accelerated Fine Procedure.

If the offender as yet objects to the decision to impose a fine and in doing so disputes the established facts and/or the legal assessment of the facts, the offender will no longer satisfy the conditions of the accelerated procedure, and the discount on the fine imposed may be cancelled.

Conditions for the accelerated fine procedure:

No previous fines have been imposed.
There case does not involve any (reasonable) suspicion of offences under general criminal law, for example forgery, fraud or embezzlement, with respect to the offender.
There is no public indignation involved.
The case does not involve any substantial and specific prejudice to consumers/clients. An example of prejudice would be the abuse of personal data obtained.
There are no other supervision antecedents. An exemption to this stipulation would be a warning in connection with the inclusion of the exemption notification in an incorrect manner.
The offender has cooperated well in the AFM’s investigation.
The offender does not dispute the facts and legal assessment of the facts from the investigation.
The offender does not provide an opinion on the intention to impose a fine, and will not request inspection of the fine file.
The offender satisfies all conditions of the accelerated fine procedure within the term of the Pilot for an Accelerated Fine Procedure.