Projective Group’s Risk & Compliance specialists closely monitor developments in financial laws and regulations. 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 the daily practice of our clients.
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.
What laws and regulations have recently come into force?
The following developments are explained in this article:
On 6 March 2024, Directive 2024/885 on empowering consumers for the green transition was published in the Official Journal of the EU. This Directive applies to businesses operating in the EU market and offering products and/or services to consumers. The Directive has the same scope as the Unfair Commercial Practices Directive.
For financial companies, it is important to note that this Directive will amend the Unfair Commercial Practices Act (UCPA).
(i) The list of product characteristics on which a trader may not mislead consumers is extended to include environmental or social impact, durability and repairability.
(ii) New practices considered to be misleading are added. These include, for example, making generic or vague environmental claims (e.g. ‘environmentally friendly’, ‘biodegradable’, ‘climate neutral’ and ‘green’) that cannot be substantiated. Consider claims that falsely imply superior environmental performance. Or claiming that an environmental claim applies to the whole product, when in fact it only applies to one aspect of the product. Misleading claims about greenhouse gas emissions are also prohibited.
In addition, the use of a sustainability label is regulated. Only sustainability labels that are (i) based on official certification schemes, (ii) registered as certification marks or (iii) issued by public authorities are allowed.
EU member states have until 27 March 2026 to transpose the directive into national laws and regulations. The rules will apply from 27 September 2026.
The Payment Services Directive (PSD2) regulates the provision of payment services across the EU, and has been in force since 13 January 2018. The European Commission has proposed to amend and modernise the current legal framework. The EC has therefore proposed to adopt a Payment Services Regulation (PSR) and to rename PSD2 as PSD3.
PSD3 aims to ensure that consumers can continue to make safe and secure electronic payments and transactions in the EU, both domestically and across borders. The new rules therefore focus on the changing world of electronic payments and reducing financial risks, including fraud and data breaches.
The European Parliament’s negotiating positions on the PSR and PSD3 were published on 23 April. Once the Council has adopted its position, negotiations will take place between the Council and the EP in order to result in joint proposals. These negotiations will start shortly. Compromise proposals are expected in the fourth quarter of 2024 and final adoption not before early 2025.
Once finally published by the EC, the proposals will enter into force 18 months later.
With the entry into force of the Future Pensions Act (Wtp) on 1 July 2023, the transition period to a new pension system has begun. The Wtp leads to a major overhaul of the pension system. The Wtp sets a number of milestones or transition dates to ensure that all pensions are transferred to the new system by 1 January 2028.
The legislative proposal has two main objectives:
The bill was tabled in the House of Representatives on 28 June 2024. It is not yet clear when the bill will become applicable.
The Dutch legislator wants to modernise the Sanctions Act and has therefore launched a consultation on 7 June 2024. The current Sanctions Act has been in existence since 1977 and could be modernised. The aim of the modernisation is to better meet the requirements of European sanctions decisions and regulations.
In doing so, the legislator appears to be following the structure of the current AML/CFT act. Among other things, the modernisation will extend and modernise the sanctions supervision of certain groups, increase the scope for state intervention and enable better data exchange. Based on the consultation proposal, the changes will include the following:
The consultation is open until 9 August 2024. It is not yet clear when the new sanctions regime will enter into force.
Based on research, the AFM has concluded that financial firms are seeking to carefully design and conduct relevant scenario analyses as part of their product governance. The AFM also notes that scenario analyses are often conducted from the perspective of the firm (is the product or service profitable?). To a lesser extent, the customer perspective and the impact of the product or service on the target group are examined. The AFM believes that companies benefit from a good understanding of the customer perspective in the event of adverse conditions, as this reduces the risk of mis-selling.
With this guidance, the AFM offers market participants guidance on how to conduct scenario analysis from the customer perspective. The guidance includes how, which and when scenario analysis can be used. As a result of scenario analysis, the product, the target group and/or the associated distribution strategy may need to be adapted. The guidance includes a number of examples of scenario analysis for different product groups.
The guidance applies to all types of manufacturers of products and services covered by the PARP standard. A guidance document does not have the status of legislation or regulation, but is intended as a tool. The AFM aims to provide guidance and clarity to market participants on scenario analysis in the PARP process.
The guidance was open for consultation until 7 June 2024. The AFM expects to publish the final guidance on its website after the summer. A feedback statement will also be published at the same time, outlining what the AFM has done with the responses to the consultation.
Recently, we also offer the possibility to easily and conveniently gain insight into ESG regulations that may not apply directly to your financial institution, but are indirectly relevant. For example, because you are planning to invest in a ‘green project’. A good overview of ESG regulations can help you make an informed decisions.
What other upcoming laws and regulations do you need to consider?
In our next Regulatory Update article, we will look in more detail at the following developments, among others:
We hope this article has given you an idea of the recent developments. Want to make sure you haven’t overlooked anything? Then you can request a tailor-made Regulatory Update (available in Dutch and English). You will then receive a comprehensive quarterly report with current affairs, legislative changes, regulatory publications and consultations. This report is fully tailored to your organisation and activities. The relevant developments are explained by our experienced consultants, and there is also an opportunity to ask questions, for example about ambiguities in the legislation.
With our Regulatory Update, you will be timely informed of upcoming legislative changes and will not be confronted with any surprises.
Our specialists discuss the possible impact on your organisation with you and help you think about possible next steps and their practical implementation. They can also help with an action plan for adapting policy and procedures, so you always remain in control. For more information, please feel free to contact us.
