Frequently asked questions ban on inducements for investment firms - Purpose

Frequently asked questions - Ban on inducements for investment firms - Purpose

Why is the ban on inducements for investment firms introduced?

The ban on inducements is introduced to increase transparency and to reduce the perverse incentives in investment services. The ban will change and simplify the cash flows between investors, providers and investment service providers. It will ensure that the investment services that are provided to investors are fair, honest and professional. Whereas in the past there could have been an incentive to guide investors towards the providers that offer the highest commission, this incentive will now be removed.

This will give investors insight into the costs of investment services. Furthermore, by moving to a direct fee model, investment firms are better able to demonstrate their independence to investors. This makes it easier for investment firms to clearly show the added value of their financial services.

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What has happened prior to the introduction of the ban on inducements?

The AFM has been consulting with the market regarding the commissions for some time. Transparency and appropriate incentivisation are core values in the AFM’s theme of ’Vermogensopbouw’. These discussions have led to an agreement between the AFM and six financial market participants that was published on 14 February 2013. At the same time, the Minister of Finance announced that a legal ban on inducements would be introduced. The six financial market participants that signed the agreement are also subject to the statutory ban.

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How will the AFM proceed with this issue?

The AFM will supervise compliance with the ban on inducements.

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