Cash Payment Services Act and Revised Bonus Cap: What Is Changing for Financial Institutions?

Financial institutions are facing two significant changes. The Cash Payment Services Act and Amendment to the Scope of the Bonus Cap introduces new obligations to safeguard the availability of cash while also revising the scope of the statutory bonus cap. In particular, the changes to the bonus cap may have implications for remuneration policies, HR processes and the internal governance of financial institutions. In this article, we explain the key changes and outline how financial institutions can prepare.

Ensuring the Availability of Cash

The Cash Payment Services Act introduces new statutory obligations to safeguard the availability of cash services. Banks with more than three million payment account holders will become responsible for maintaining facilities for depositing and withdrawing cash in the Netherlands. Banks that fall within the scope of this obligation must cooperate to ensure that these facilities remain available nationwide.

The Act also introduces specific requirements regarding the accessibility of these facilities. Every payment account holder residing or established in the Netherlands must, in principle, be able to withdraw cash within a five-kilometre radius of their location. Banks will therefore need to ensure that a cash withdrawal facility is available within five kilometres for each of their account holders.

In addition, cash withdrawal and deposit facilities must be accessible to other banks, allowing their customers to use the same infrastructure. The practical implementation of this access requirement, including the applicable fees, will be set out in the Cash Payment Services Decree.

Furthermore, banks with more than 50,000 payment account holders must ensure that their customers are able to withdraw cash. Banks with more than 500,000 payment account holders and a balance sheet total of at least €50 billion will also be required to provide facilities for depositing unpackaged euro banknotes. This means that these medium-sized banks will need to adapt their services to provide cash withdrawal and deposit facilities through the national cash infrastructure.

Extension of the Right to a Basic Payment Account

The statutory right to a basic payment account will be extended to companies, associations and foundations established within the European Union and registered with the Dutch Trade Register. Banks offering business payment accounts in the Netherlands will therefore be required to allow these organisations to apply for and use a basic payment account in euros.

Consumers have long had a statutory right to a basic payment account. This legislative amendment introduces a comparable right for companies, associations and foundations that fall within the scope of the scheme. For banks, this may affect onboarding procedures, the assessment of payment account applications, and policies relating to the refusal or termination of customer relationships. For example, banks will only be permitted to refuse a basic payment account on statutory grounds, such as where they are unable to comply with the requirements of the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act (Wwft).

Changes to Remuneration Rules

Under European remuneration rules, many requirements apply only to employees who have a material impact on the institution's risk profile (identified staff). By contrast, several Dutch remuneration rules currently apply to all employees working for financial institutions. This legislative amendment partially removes that distinction.

One of the most significant changes concerns the bonus cap. In the Netherlands, financial institutions are generally subject to a maximum variable remuneration of 20% of an employee's fixed annual salary. Under the new legislation, this bonus cap will apply only to identified staff.

The changes are not limited to the bonus cap. Several other remuneration requirements will also apply exclusively to identified staff. These include, among other things, the requirement that at least 50% of variable remuneration is based on non-financial performance criteria, disclosure requirements relating to variable remuneration, rules governing retention bonuses, and requirements concerning the holding period for certain financial instruments. As a result, financial institutions will have greater flexibility when designing remuneration arrangements for employees who do not qualify as identified staff.

Identified Staff

As various remuneration rules will now apply only to identified staff, it becomes increasingly important to determine which employees fall within this category. This classification determines which employees remain subject to the bonus cap and the associated remuneration rules.

The Act does not provide a general definition of identified staff. However, existing European legislation makes clear that board members, senior management and employees responsible for key control functions or significant business units may qualify as identified staff. This list is not exhaustive, meaning that other employees may also fall within this category where their activities have a material impact on the institution's risk profile.

For the purpose of identifying identified staff, three categories of financial institutions can be distinguished:

• Banks and large investment firms, which already identify identified staff in accordance with Article 92(3) of the Capital Requirements Directive (CRD) and the associated implementing rules;
• Institutions that are already subject to sector-specific European legislation containing a comparable identified staff regime, such as certain insurers, smaller investment firms and pension institutions;
• Financial institutions for which sector-specific European legislation does not contain an identified staff regime, such as certain payment institutions, financial advisers, intermediaries and tied agents.

The legislative changes are likely to have the greatest impact on this final category, as these organisations will need to determine for themselves which employees qualify as identified staff. While they may draw inspiration from the approaches adopted by institutions already subject to sector-specific rules, they will need to establish their own assessment criteria.

What Does This Mean for Your Organisation?

This legislative amendment requires many financial institutions to reassess which employees qualify as identified staff. In addition, organisations should review their remuneration policies, HR processes and governance arrangements relating to variable remuneration to ensure they are well prepared for the new requirements.

Des questions ?

Do you have questions about this legislative amendment or would you like to understand what these changes mean for your organisation?

Projective Group supports financial institutions in translating new legislation and regulation into practical processes and demonstrable compliance. We help organisations assess the impact of new regulatory requirements and support their implementation, ensuring they are fully prepared to comply with the new legislation.