Risk & Compliance

5 pitfalls in the application process for financial services licences

Date:October 27, 2023

The provision of financial services in the fields of insurance, credit and savings requires a licence under the Financial Supervision Act (Wft). This Wft licence can be granted by the Dutch Authority for the Financial Markets  (AFM). A licence application is not a simple process. Applying for a licence requires specialist knowledge and extensive preparation. In this article, we discuss five pitfalls involved in applying for a Wft licence.

1. An incorrect licence category 

An incomplete or incorrect licence application can lead to delay or even rejection of the application. And that is a shame, because a licence application always involves costs – even if the application is rejected. That is why it is important to check in advance which licence category the activities you want to carry out fall into. Do you want to advise or only mediate? It is important to have this in focus when you apply, as different requirements apply. 

To qualify for a Wft licence, your organisation must meet certain legal requirements. Not only when applying for the licence, but also afterwards.

Financial legislation is quite complex and it is difficult to get a complete overview of the applicable laws and regulations. The Wft licence application forms do not cover the full range of requirements. It is important that you do not overlook any requirements.

3. Policymaker suitable? 

Business leaders are assessed for suitability and reliability. They should have management and leadership experience in a relevant work environment. The relevant work environment is the financial sector. It is therefore important to assess the employment history of prospective policy makers before submitting an application.

4. Not open about reliability and suitability 

Policymakers are assessed by the AFM for suitability and reliability. As part of this process, the regulator assesses whether there are any antecedents that would prevent the individual from fulfilling the intended role. Such antecedents may include, for example, a criminal conviction or a breach of tax laws. Failure to disclose a criminal record will be held against an applicant. You should therefore always disclose any antecedents, even if you are in doubt as to their relevance.

5. Unrealistic business plan

The AFM wants to get a full picture of the activities an organisation intends to undertake. Provide an overview of the activities, explain the intended strategy and revenue model, and make a financial forecast. Try to be realistic and don’t forget the customer’s interest. A (too) fast growth of your activities will raise questions about the operational control of your organisation and how the customer interest is served.

Want to know more? 

We hope our tips will help you avoid common mistakes and make your licence application go smoothly. Licence applications that are complete and of good quality are most likely to be successful. Of course, you can also read more about our licencing services or contact us for a free consultation.