5.5.2 Legal framework for fit and proper assessments in The Netherlands

Under Dutch regulation, all financial institutions, including banks, insurance companies, asset managers and investment firms, have to ensure that their members of the management board as well as de facto policymakers are fit (“geschikt”) and proper (“betrouwbaar”) to occupy his or her position.1 In addition, executives working in banks and insurance companies on the level just below the management board (second echelon), are also subjected to fit and proper requirements. Examples are the Head Risk Management or the Head of Compliance. In accordance with the Dutch Twin Peaks-model and the cross-sectoral approach that the Dutch legislator has taken in the Wft, all Dutch financial institutions have to fulfill similar fit and proper-requirements. Dutch supervisors have adopted the (highest) suitability standards, laid down in CRD IV2 and MiFID II,3 for all financial institutions subject to the Wft (cross-sectoral approach).4

It is, of course, the primary responsibility of the financial institutions to make sure that the members of the management body and, if applicable, members of the second echelon, are fit and proper to fulfil their duties. However, these members are also assessed by the regulators before taking up the intended position (initial assessments). Fit and proper-criteria need to be fulfilled on an ongoing basis. Should financial supervisors come across new facts or circumstances during ongoing supervision, which may shed a different light on the prior fit and proper approval, they could consider reassessment.

Dutch financial institutions, as noted previously, have the attention of no less than three financial supervisors. With regard to fit and proper-testing, all three may be involved. DNB takes the lead with respect to fit and proper testing of members of the management body of insurance companies and less significant banks, whereas the ECB takes the lead in the case of significant banks.5 AFM, on its part, takes the lead in the case of investment firms and asset managers (see also paragraph 5.3). In practice, DNB and AFM, and, with regard to banks, the ECB, work closely together on the assessments.

When assessing fitness, AFM and DNB make use of the joint Policy Rule on Fitness 2012 (Beleidsregel Geschiktheid).6 The assessment of propriety (integrity) is based on the Wft and relevant orders in council. In European legislation, the term “suitability” is used, which includes both fitness and propriety. In June 2018 the revised EBA/ESMA Guidelines on suitability came into force, which apply to banks and certain investment companies. The Guidelines make a distinction between the following aspects of suitability: adequate knowledge, skills and experience; sufficient time commitment; conflicts of interest and independence of mind; collective suitability and reputation, honesty and integrity.7 Both DNB, AFM and the ECB8 comply with these Guidelines. The aspects mentioned in the Guidelines were already, for the most part, integrated in Dutch law and the Policy Rule on Fitness.9 DNB also complies with the relevant EIOPA Guidelines on system of governance, which contain fit and proper-requirements in insurance companies.10 Dutch regulations on fit and proper assessments are, however, far more detailed and comprehensive than EIOPA Guidelines.