Amendments to the Further Regulation on the Supervision of the Conduct of Financial Undertakings Wft
On 14 December 2022, the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM), published amendments to the Further Regulation on the Supervision of the Conduct of Financial Undertakings under the Financial Supervision Act (Nadere regeling gedragstoezicht financiële ondernemingen Wft, Nrgfo Wft).
1. Introduction
On 14 December 2022, the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM), published amendments to the Further Regulation on the Supervision of the Conduct of Financial Undertakings under the Financial Supervision Act (Nadere regeling gedragstoezicht financiële ondernemingen Wft, Nrgfo Wft). In addition to textual adjustments in the Nrgfo Wft, three amendments will be made to that Further Regulation. These amendments are summarized below.
2. Comparison chart replaces service provision document
The first amendment to the Nrgfo Wft is the introduction of a comparison chart for financial service providers. This comparison chart replaces the existing service provision document (dienstverleningsdocument), with which financial service providers must provide their clients . On top of this, financial service providers will be obligated to inform potential clients whether or not they advise independently.
The comparison chart is expected to be introduced on 1 April 2023, but due to the impact of this amendment, the AFM will inform the sector during the run-up to the introduction.
3. KID replaces KIID for PRIIPS
As of 1 January 2023, the Key Information Document (KID) will replace the Key Investor Information Document (KIID) for Packaged Retail and Insurance-Based Investment Products (PRIIPs). As of this date, Alternative Investment Fund Managers and managers of an Undertaking in Collective Investments in Transferable Securities will be required to draw up a KID when offering units to retail investors. The KID must be drawn up in accordance with the PRIIPs Regulation. The objective of this Regulation is to enable retail investors to understand and compare the key characteristics and risks of PRIIPs.
As a result of the replacement of the KIID by the KID, this amendment will lead to a change in the advertising rules in the Nrgfo Wft that will relate to the KID.
4. No approval required for segregated assets account
Since 7 July 2022, it has been possible for investment firms to hold their client funds in a segregated assets account with a Dutch bank. The purpose of the segregated assets account is to protect client funds from possible bankruptcy of the investment firm by segregating these funds from the investment firm’s own assets. In addition, the clients’ funds deposited in a segregated account will be covered by the deposit guarantee scheme.
With this amendment to the Nrgfo Wft, prior approval from the AFM is no longer required when an investment firm intends to make use of a segregated assets account. However, the investment firm must notify the AFM in a timely manner of its intention to maintain a segregated assets account.
5. Entry into force
The amendments related to the KID and the segregated assets accounts will enter into force on 1 January 2023. The comparison chart is expected to be introduced on 1 April 2023, with a six-month transition period. The Nrgfo Wft will be amended accordingly later in 2023.
