Projective Group’s Risk & Compliance specialists closely monitor financial law and regulation developments. Using our compliance software, Ruler, we keep track of all current affairs. We then determine the impact of the changes and translate the developments into our clients’ daily practice.
What developments should your organisation be aware of? In our quarterly Regulatory Updates, we provide a structured overview of regulatory changes and their impact on financial institutions. In this article, we highlight a number of developments.
In this video, expert Danielle personally guides you through the key highlights of the latest regulatory developments. This video is currently only available in Dutch.
Retrospective
What laws and regulations have recently come into force?
On 21 November 2024, ESMA guidelines on fund names using ESG and sustainability-related terms became applicable. With these guidelines, ESMA aims to protect investors from unsubstantiated or exaggerated sustainability claims. ESMA also wants to provide regulators and asset managers with clear and measurable criteria to assess fund names containing ESG or sustainability-related terms. The guidelines set out requirements for using ESG-related terms, sustainability, transition and impact in the fund name. There is a six-month transition period for investment institutions that already existed before 21 November 2024. New investment institutions must comply with the guidelines immediately.
On 3 December 2024, the AFM Guidance on PARP scenario analyses from a customer perspective came into force. With the Guidance, the AFM aims to provide guidance on using scenario analyses from a customer perspective, which is an important part of the Product Approval and Review Process.
On 21 December 2024, the Green Bond Regulation became applicable. This regulation sets a framework for issuing environmentally sustainable bonds (‘green bonds’). Based on this regulation, issuers can use the designation ‘European Green Bond’ or ‘EuGB’ for their ecologically sustainable bonds if they meet the conditions of the regulation.
On 30 December 2024, the Regulation on Information to accompany transfers of funds and transfers of specific crypto assets, also known as Transfer of Funds Regulation, abbreviated as TFR, became applicable. Payment service providers must collect, store and transfer information on the sender and receiver of funds with each transaction. This includes identifying information (such as name, address, date of birth and account details). These requirements are unchanged. However, the obligations under the TFR are now applicable instead of Regulation 2015/847. This creates a level playing field between transfers of official currency and crypto assets.
The following developments are explained in this article:
1. Mortgage Reporting Act DNB
The Mortgage Market Reporting Act DNB obliges financial institutions to report on mortgages to DNB regularly. This reporting obligation applies to banks, investment institutions, pension funds, and insurers in the Netherlands with mortgages on their balance sheets. Not all institutions have a responsibility to report. Threshold values are set; only institutions with a mortgage portfolio above these values must report.
The law ensures that DNB gets a complete picture of the mortgage market in the Netherlands. DNB needs this data to:
produce statistics on the mortgage market and the financial sector,
understand how the mortgage market can affect financial stability. and
recognise and mitigate risks to financial stability.
The data must be pseudonymised and provided to DNB electronically. The reporting requirement will be further detailed, clarifying which data must be provided and how frequently. It will involve data related to the loan, such as information about the borrower, the collateral and the risk characteristics.
The Explanatory Memorandum states that the legislator intends to bring this law into force by 1 July 2025. However, the bill is yet to be submitted to the Lower House. It is, therefore, questionable whether 1 July 2025 will be met.
2. Regulation creating a European Single Access Point (ESAP)
On 20 December 2023, the regulation leading to creating a European Single Access Point (ESAP) was published. This regulation requires ESMA to establish a central European access point providing free and user-friendly access to public financial and sustainability-related information from European companies and investment products.
The ESAP regulation does not introduce any new reporting requirements for European companies. The platform collects information already made public under existing European directives and regulations.
The ESAP platform is expected to be available from the summer of 2027 and will gradually be implemented to ensure a robust rollout.
3. Credit Servicers and Credit Buyers Directive Implementation Bill
The bill implements Directive (EU) 2021/2167 on credit servicers and credit buyers. The directive's purpose is to encourage the development of secondary markets for non-performing credit agreements (also known as ‘non-performing loans’ or ‘NPL’).
The proposal introduces a licensing requirement and ongoing supervision under the Financial Supervision Act for parties servicing non-performing credit agreements (credit servicers). It also introduces requirements for credit buyers, the parties that take over non-performing credit agreements from a European bank. Finally, the proposal contains some amendments to Book 7 of the Civil Code.
Banks must notify the AFM semi-annually about non-performing credit agreements that have been sold. The data required for this will be determined at a later stage.
Banks must also make certain information available to potential loan buyers. This information must be shared based on prescribed templates and is detailed in Implementing Regulation 2023/2083.
In addition, banks and credit providers (both consumer and mortgage) must inform consumers if they wish to change the terms of the agreement. This includes describing the changes and how consumers can file complaints about the proposed changes. This obligation applies to both NPLs and performing credit agreements.
4. European Legislative Framework for Listings (Listing Act)
On 7 December 2022, the European Commission published a proposal to simplify listings. This proposal, also known as the European Legislative Framework for Listings or the “Listing Act”, had its core finalised in November 2024.
Under this framework, both the rules governing the preparation of a prospectus and the provisions concerning market abuse have been streamlined. Amendments to MiFID II are also intended to increase the visibility of small and medium-sized enterprises to investors.
Finally, the framework introduces the possibility of operating with multiple voting rights structures. This allows existing owners to retain sufficient control over the company when it is listed on a trading platform, while simultaneously safeguarding the rights of new shareholders.
On 4 December 2024, the first part of the Listing Act came into force. This covers a substantial portion of the adjustments made by this regulation to the Prospectus Regulation (2017/1129), the Market Abuse Regulation (596/2014) and MiFIR (600/2014). More extensive changes introduced by this regulation—such as the implementation of an EU follow-on prospectus and an EU growth prospectus, along with the abolition of the EU recovery prospectus introduced in response to COVID-19—will only come into force in 2026.
5. DNB SIRA Good practices
In 2015, DNB published its first good practices for conducting a systematic integrity risk assessment (SIRA). In recent years, DNB has found that financial institutions focus only on the elements mentioned in the 2015 good practices when preparing a SIRA. As a result, newer insights and opportunities in practice are often not considered, leading to an insufficient understanding of the specific integrity risks the institution faces. As a result, the institution can also not demonstrably and effectively mitigate its integrity risks.
As the SIRA is often not or insufficiently used as a dynamic document for identifying, analysing and mitigating integrity risks, DNB has decided to revise the SIRA Good Practices. The Good Practices contain suggestions or recommendations for financial institutions. They provide examples of possible applications that, in DNB's opinion, effectively fulfil the obligations under laws and regulations.
This new SIRA Good Practices provides practical examples and points of attention that can be used when preparing the SIRA and the Wwft risk assessment.
The good practices are expected to be published in their final form in the first quarter of 2025.
ESG Extended
We now offer an ESG Extended service, providing clear insights into ESG regulations that may not directly apply to your financial institution but are still relevant indirectly. For instance, if you are considering investing in a “green project,” a thorough understanding of ESG regulations can help you make informed decisions, considering the ESG impact.
We hope this article gives you an idea of the recent developments. Want to make sure you haven’t missed anything? You can request a customised Regulatory Update (available in Dutch and English). You will receive a comprehensive quarterly report on current affairs, legislative changes, regulatory publications, and consultations. This report is fully tailored to your organisation and activities. Our experienced consultants will explain the relevant developments, and there will also be an opportunity to ask questions, for example, about ambiguities in the legislation.
With our Regulatory Update, you will be informed about upcoming legislative changes in a timely manner, ensuring there are no surprises.
Our specialists will discuss the potential impact on your organisation and collaborate with you on possible next steps and their practical implementation. They can also assist in developing an action plan for adapting policy and procedures, helping you remain in control. For more information, please feel free to contact us.
