News Update Financial Regulatory
14 January 2025
In this News Update we discuss: the AFM's Trend Monitor 2025, which analyses key trends and risks anticipated in the financial sector; DNB's Supervisory Calendar for Insurers 2025, focusing on three strategic themes; and the Minister of Finance's update on implementing Directive 2021/2167 on credit servicers and credit purchasers. We further highlight some other financial regulatory publications issued since our last News Update. Subscribe here to the News Update Financial Regulatory.
AFM's Trend Monitor 2025
The Dutch Authority for the Financial Markets (AFM) recently published its Trend Monitor 2025, which provides a comprehensive analysis of the key trends and risks anticipated in the financial sector. The document highlights the significant impact of digitalisation, sustainability, internationalisation and integrity on the financial landscape, emphasising the importance of early risk identification to ensure fair and transparent financial markets. We will discuss the Trend Monitor 2025 with respect to financial services and capital markets in more detail below.
Financial services
With respect to financial services, the report underscores four major points of attention:
- New pension scheme: the AFM highlights that when transitioning to new pension schemes, it is important that participants receive clear, balanced, correct and timely information about the consequences of the transition, including through transition overviews.
- Digitalisation: digitalisation is fundamentally changing the financial sector through increased data use, advanced AI models and digital distribution channels. The AFM stresses the importance that financial service providers safeguard the customers' interests, prevent errors in data and model usage, and are alert to the increased possibilities of fraud.
- Sustainability integration: according to the AFM, financial institutions should make an effort to integrate sustainability into the development and distribution of financial products, using understandable language and setting realistic expectations.
- Cross-border financial services: cross-border services are increasing in a number of markets, particularly in the non-life insurance and investment markets. The AFM's main concern is that consumers may receive less consumer protection due to differences in interpretation of regulations.
Capital markets
The AFM identifies several developments and risks within capital markets due to the trends of digitalisation, sustainability, internationalisation, and integrity and criminal behaviour:
- Digitalisation is making markets more interconnected, but it also introduces risks such as algorithmic collusion and cyber threats. The use of AI in trading can lead to market abuse, and the interconnectedness of market participants increases the risk of systemic disruptions. The implementation of the EU's Digital Operational Resilience Act (DORA) aims to enhance digital operational resilience, but cyber risks remain a significant concern.
- Sustainability data is crucial for investment decisions, but its limited availability weakens investor confidence and market efficiency. Regulatory pressures are pushing companies towards private markets, which offer less transparency but potentially higher returns.
- Internationalisation leads to European capital markets losing ground compared to American capital markets. The AFM notes that the European capital markets are overly fragmented and calls for an accelerated European Capital Markets Union to enhance economic growth and financial stability.
- Integrity and criminal behaviour are additional concerns of the AFM. Social media and fake news are increasingly affecting capital markets. In addition, internationalisation and fragmentation of capital markets increase the risk of insider trading and market manipulation. Under the Markets in Crypto-Assets Regulation (MiCAR), regulating cryptos is a step forward, but challenges remain in tackling market abuse in the decentralised crypto sector.
DNB's Supervisory Calendar for Insurers 2025
The Dutch Central Bank (DNB) published its Supervisory Calendar for Insurers 2025 (mostly in Dutch), focusing on three strategic themes: System of Governance (SoG), DORA, and the quality of standard formula calculations.
- SoG: DNB has several years of experience with SoG evaluations among large insurers. The evaluations provide insurers with opportunities to enhance their governance and internal supervision. However, DNB's research indicates that there is still room for improvement on consistency and effectiveness. The 2025 thematic study aims to gain a clear understanding of how different insurers conduct and utilise SoG evaluations, establish guidance and good practices, and provide feedback on individual outcomes, including expectations for follow-up actions.
- DORA: with DORA's implementation, the management of IT, cyber and outsourcing risks is now legally anchored in Europe. DNB's 2025 focus includes monitoring the management of these risks in line with DORA, maintaining updated insights into concentration risks within the insurance sector through information registers, and gaining a better understanding of signals from current threat analyses. DNB will conduct risk-inventory discussions, deep dives, and organise seminars/round tables with selected insurers.
- Quality of standard formula calculations: insurers must apply the standard formula correctly to ensure they have an adequate Solvency Capital Requirement (SCR) that matches their risk profile. Incorrectly applying the standard formula can lead to insufficient capital holdings and poor management decisions. The thematic study aims to identify how insurers ensure the accuracy of their SCR calculations. Solo insurers will be asked to complete a questionnaire and/or data request, followed by in-depth examinations at selected insurers.
The Minister of Finance's update on implementing the Directive 2021/2167 on credit servicers and credit purchasers
The Minister of Finance updated the House of Representatives in a letter on the progress of implementing the Directive 2021/2167 on credit servicers and credit purchasers (Directive).
The draft legislative proposal for the Implementation Act on the Directive has recently been submitted to the House of Representatives, along with the advice from the Council of State on the matter and the Further Report. The draft proposal implements the Directive into the Financial Supervision Act (Wet op het financieel toezicht) and Book 7 of the Dutch Civil Code (Burgerlijk Wetboek).
The Directive provides a regulatory framework for (i) the transfer by banks of non-performing loans (NPLs) as defined in the Directive or the rights arising from such loans, as well as for (ii) the management of such loans and rights by 'credit servicers'. The Directive aims to contribute to the European Union's strategy to reduce the volume of NPLs on bank balance sheets.
Since the deadlines for Member States to implement the Directive (29 December 2023) and apply its provisions (30 December 2023) have passed, the European Commission has issued a formal notice to the Netherlands for late implementation.
In view of the letter from the Finance Committee of the House of Representatives dated 1 March 2024, requesting the prompt implementation of the Directive, the government hopes for an expedited parliamentary process for the draft proposal. The general administrative measure, which also aims to implement the Directive and is currently being prepared, will be submitted to the Council of State for advice as soon as possible.
The parliamentary process can be followed here (in Dutch).
Other financial regulatory publications
We have highlighted a selection of other publications by legislatures and regulators for the financial markets and financial supervision.
AFM
- In addition to Trend Monitor 2025, the AFM published a study on consumer credit and financial vulnerability, providing insight into the consumer credit market, borrowers and payment arrears in the years 2018-2022.
- On 3 December 2024, the AFM published the final Guideline on scenario analyses from a customer perspective for the Product Approval and Review Process (PARP) standard. With this new guideline, the AFM provides a framework for developers and co-developers of financial products to conduct scenario analyses. These analyses are part of the PARP. They aim to ensure that consumers receive financial products that match their goals and situation, contributing to consumer protection.
- On 18 December 2024, the AFM published news (in Dutch) that on 24 October 2024, it imposed an order subject to a penalty on Zeeland Assurantiën B.V. This financial service provider did not comply with the AFM's information requests. The penalty for Zeeland Assurantiën is EUR 2,000 per day with a maximum of EUR 20,000.
- On 20 December 2024, the AFM published (in Dutch) a decision from 20 August 2024, in which it imposed a EUR 3 million fine on VDVI B.V. for market manipulation. VDVI is a financial holding company primarily engaged in the purchase, development, operation and sale of real estate. VDVI artificially increased the price of a listed equity fund, disrupting fair pricing and undermining confidence in financial markets.
- On 20 December 2024, the AFM announced (in Dutch) that it conducted an exploratory study on the preparation for DORA among several proprietary trading firms (PTFs) and shared key points in a report. This report can be used by PTFs and other companies to further implement DORA requirements, which will come into effect on 17 January 2025.
- AFM published a news article (in Dutch) on 23 December 2024 of the withdrawal of Fidelis Financiële Diensten' licence due to multiple regulatory violations and an inability to sustainably comply with regulations.
DNB
- DNB published a news article (in Dutch) on 20 December 2024 about the supervisory approach to DORA, providing an overview of the latest developments.
- DNB published a news item (in Dutch) outlining general points of attention for the supervision of investment firms and investment institutions in 2025:
- The calculation of the fixed overheads requirement (vastekostenvereiste, VKV). DNB finds in its ongoing supervision that the calculation and reporting of the VKV by institutions can be improved. Institutions will receive a letter from DNB this year with an explanation of the VKV.
- The quality of the prudential reports submitted to DNB.
- The market risk and its calculations under the Investment Firms Regulation by PTFs.
ESAs
- On 10 December 2024, the European Supervisory Authorities (ESAs) published joint Guidelines to facilitate consistency in the regulatory classification of crypto-assets under MiCAR. These include a standardised test to promote a common approach to classification, as well as templates market participants should use when communicating the regulatory classification of a crypto-asset to supervisors.
- On 17 December 2024, the ESAs published a summary report of a dry run exercise in which approximately 1,000 market participants submitted their DORA information registers. The quality of the data in the registers met the ESAs' expectations for a 'best effort' exercise. Of the analysed registers, 6.5% passed all quality checks, while 50% of the remaining registers failed fewer than 5 of the 116 quality checks. The ESAs are confident that the goal of having registers of sufficient quality by 2025 is within reach, provided the sector makes some additional efforts. The ESAs emphasise that all stakeholders in the sector, including financial entities that did not participate in the exercise, should carefully consider the findings in the report and all supporting material provided by the ESAs. This will help stakeholders better prepare for the official reporting starting in 2025.
- On 17 December 2024, the European Security and Markets Authority published the last package of technical standards and guidelines for MiCAR. The package includes technical standards on market abuse, guidelines on reverse solicitation, guidelines on product suitability, guidelines on crypto-asset transfer services, guidelines on the qualification of crypto as financial instruments, and guidelines on the maintenance of systems and IT security measures.