MiCA licence application, active commission transparency, new rules for automated advice

News Update Financial Regulatory

Active commission transparency , New rules for automated advice, MiCA licence application

20 maart 2024

In this News Update we discuss MiCA licence application or notification filing, active commission transparency mandatory from 1 July 2024, and new rules for automated advice from 1 July 2024. We further highlight some other financial regulatory publications issued since our last News Update. Subscribe here to the News Update Financial Regulatory.

AFM accepts MiCA licence application or notification from 22 April 2024

From 22 April 2024, market participants may file their application for a licence or their notification of the provision of crypto-asset services (CASP-licence or notification) under the Markets in Crypto-Assets Regulation (MiCA) with the Dutch Authority for the Financial Markets (AFM). In preparation for a licence application, market parties may request the AFM for an optional pre-scan procedure, which includes a scope and planning meeting, a questionnaire on the most important topics, the opportunity to present the answers to the questionnaire, and finally a discussion with and written feedback from the AFM. We are closely monitoring these and other developments in the lead-up to the MiCA implementation date and publish regular blogs on the impact of MiCA.

Active commission transparency from 1 July 2024

From 1 July 2024, advisers and intermediaries in the private non-life insurance sector will be required to be actively transparent about the commission amounts they receive from insurers. This means that from that date they must proactively disclose not only how they must be compensated but also, where insurer-paid commissions are concerned, how much they are paid. They must do so before concluding the insurance agreement. As the exact commission amount can usually not be determined until the insurance agreement is concluded, an accurate average will be sufficient. The obligation applies to new insurance to be taken out. For more information see our blog.

Robo-advice
New rules for automated advice from 1 July 2024

Automated advice means advice that is entirely generated by an automated system. Clients' personal requirements and information are digitally analysed, after which the automated system produces the advice and communicates it to the consumer or client. This form of advice will be subject to additional rules from 1 July 2024 to ensure that automated advice is safe to use. This involves designating persons who are responsible for the automated system and the automated advice and identifying in advance a suitable target audience for automated advice. In addition, scenario analyses must be performed to demonstrate that the automated advice meets the rules. When an error is detected, the use of automated advice must be suspended until the error has been resolved, other systems must be checked for similar errors, and the consumer or client must be informed about the error. Finally, the system must also include mechanisms to check whether it is sufficiently clear to consumers and clients what information is being requested and whether they understand the advice. For more information, see our blog.

Other financial regulatory publications

We have highlighted a selection of other publications by legislatures and regulators for the financial markets and financial supervision since our February 2024 News Update.

AFM

From 12 February 2024, advisers and intermediaries can complete the Market Monitor. The first group started on 12 February, and the second and third groups at subsequent weekly intervals, on 19 and 26 February respectively. The Market Monitor must be completed within four weeks. For more information please refer to the AFM's news item (in Dutch only) and our February 2024 News Update.
The AFM fined Nxchange EUR 56,000 for failing to comply with its transaction reporting obligation. Nxchange's Legal Entity Identification code had expired, as a result of which its notifications were refused. The news item is available in Dutch only.
The AFM regularly publishes DORA Updates. Its third update incudes the ICT risk management framework, Business Continuity Management and employee learning.
On 14 March 2024, the AFM published its group insurance interpretation (in Dutch). This interpretation came in response to the judgment of 22 September 2022 of the Court of Justice of the European Union (ECLI:EU:C:2022:733), which contains criteria to determine the situations in which framework contracts involve mediation and a licence requirement. The news item includes a simple decision tree and concise information on the licensing process. Financial service providers that need a licence must have one by 1 October 2025.

AFM and DNB

On 16 February 2024, AFM and DNB published a joint position paper: Next steps for the European Capital Markets Union.

DNB

DNB fined Aegon Bank N.V. for failing to adequately manage its credit risk within part of its consumer and SME loan portfolio for a period of at least three years. The decision is available in Dutch only.
DNB fined Foris DAX MT EUR 2,850,000 for offering crypto services in the Netherlands without the required registration. The decision is available in Dutch only.

ESAs

On 1 February 2024, the European Supervisory Authorities (ESAs) published a report on BigTechs that provide financial services in the EU. These services are mainly provided in the payments, e-money and insurance sectors, and in some cases also in the banking sector.

EBA

On 8 March 2024, the European Banking Authority (EBA) started a consultation on the draft Guidelines on redemption plans under the Markets in Crypto-Assets Regulation. The consultation period ends on 10 June 2024.
On 5 March 2024, EBA published its final report on Guidelines on the establishment and maintenance of national lists or registers of credit servicers. The Guidelines will apply from 6 months after publication in all EU languages.
On 13 March 2024, EBA published the final draft Regulatory Technical Standards on complaints handling by issuers of asset referenced tokens.

EIOPA

The European Insurance and Occupational Pensions Authority (EIOPA) published a revised staff paper that investigates why customers may be hesitant to buy insurance against national catastrophes.

ESMA

In anticipation of the upcoming Markets in Financial Instruments Directive (MiFID II) review, the European Securities and Markets Authority (ESMA) issued a Public Statement on the reporting requirements under Regulatory Technical Standard 28.
The posting of investment recommendations on social media is subject to requirements of the Market Abuse Regulation. ESMA's 6 February 2024 publication contains an overview of the regulatory requirements and warns about the risk of market manipulation.
On 20 February 2024, ESMA published its overview page on DORA, the Digital Operational Resilience Act.

European Council

On 22 February 2024, the Council and the European Parliament agreed on Frankfurt as the seat of the future European authority for anti-money laundering and countering terrorist finance.
The changes to MiFID II and to the Markets in Financial Instruments Regulation (MiFIR) were formally adopted on 20 February 2024 and published in the Official Journal on 8 March 2024.

Ministry of Finance

On 27 February 2024, the Minister of Finance wrote that the review of the Act on the Supervision of Trust Offices 2018 (Wet toezicht trustkantoren 2018) would be postponed until 1 January 2026. The letter is available in Dutch only.

If you have any financial regulatory questions, please do not hesitate to contact Berry van Wijk, Juan Vervuurt, Lisanne Haarman or Gijs Hamelijnck.