As of 1 January 2012, new rules have been introduced affecting the remuneration of providers, advisors and intermediaries within the meaning of the Dutch Act on Financial Supervision
As of 1 January 2012, offerors, intermediaries and advisors are no longer allowed to charge turnover related fees with regard to non-life insurances. According to the legislator, said fees are likely to cause financial service providers to be product driven rather than client driven. As a result, these fees may cause the financial service provider to lose sight of the client’s best interest. Hence, bonus fees (bonusregelingen) and turnover fees (omzetprovisies), which are linked to the production numbers of intermediaries, are no longer allowed.
Providers, intermediaries and advisors are still allowed allowed to charge one-off fees (afsluitprovisies) and continuing brokerage fees (doorlopende provisie) with regard to non-life insurances. The above is in line with the prohibition that was already in place with regard to complex financial products, mortgage credit, payment insurance and funeral insurance contracts that were entered into as of 1 January 2009. Additionally, an open standard has been introduced with regard to the direct remuneration of intermediaries and advisors.
Intermediaries and advisors are allowed to agree with their clients a fee for the services provided unless said fee can be considered unreasonable due the nature and size of the service provided. The reasonableness of the remuneration will be determined by the characteristics of each individual service that has been provided. However, remuneration regarding transactions that are executed for the sole purpose of generating additional income will in any case be considered unreasonable.
When validating the reasonableness of a remuneration policy, the Dutch Authority for the Financial Markets considers, amongst others, the following items:
- the fees charged by the intermediary or advisor compared with the actual hours spent;
- the hours spent on the relevant advice relating to the scope of the advice;
- the scope of the advice compared to the request made by the client; and
- the hourly rates charged by the intermediary or advisor compared to their level of expertise.