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Duty of care for
financial
institutions

The duty of care for financial service providers is determined in the Dutch Financial Supervision Act (FSA). This is necessary to be able to better protect consumers against the risks that may arise when their interests are not taken into account.

What is meant by the duty of care?

The duty of care (section 4:24a of the FSA) requires financial service providers to take the interests of their customers into account and act accordingly. It is therefore important that employees gather sufficient information about the financial position, objectives, risk appetite, knowledge and experience (as far as this is relevant) in order to advise or manage in a careful manner. The essence is that the service must fit the client’s situation.

Why is there a duty of care?

The duty of care puts the consumer (more) at the center and ensures that they are better protected when purchasing financial products and services. After all, financial decisions can have major consequences for a person’s situation. When financial service providers act inaccurately, think of an incorrect risk assessment, this can result in (financial) damage for the consumer. For example, a bank must check whether a customer can meet his obligations before granting a loan.

Two laws regarding the duty of care

The duty of care is included in two different laws. The different laws regulate the legal relationship between the different parties:

  • The Financial Supervision Act (FSA)

The FSA is a public law act that regulates the relationship between the financial service provider and the government. The government imposes, for example, course requirements, requirements for advice and the duty of care.

  • The civil code

The civil code regulates the relationship between consumers and organisations. Thus also the relationship between financial service providers and their clients.

Measures taken by the AFM to fulfill the duty of care

If a financial service provider violates a customer’s interest and thus fails to comply with its duty of care, he may be subject to one of the sanctions imposed by the AFM. The AFM can take severe and less severe measures. Before taking any measure, they will always conduct a thorough investigation to determine which measure is appropriate.

This is because this conduct is harmful to the integrity of the market and confidence in the financial services. As an independent conduct supervisor, the AFM is designated to contribute to sustainable financial welfare in the Netherlands. Violating the interest of a customer can have the following measures:

  • Normative conversation/letter
  • Warning letter
  • Public warning
  • Designation
  • Order under penalty
  • Penalty
  • Designation of a silent curator
  • Licence withdrawal
  • Undertaking

The importance of employment screening to comply with the duty of care

Employees in the financial sector have a great influence on the performance of the duty of care. It is therefore important that you are sure of the integrity of your staff. One of the ways organisations fulfill the legal obligation is by screening their employees.

Veilige wervingsbeslissingen door screening met Validata

Comply with the duty of care with Validata

  • Validata addresses your concerns: As soon as you have registered a (potential) employee and have chosen the matching screening profile, Validata takes the entire screening process off your hands.
  • Wide network of trusted partners: Validata has a partner network that allows us to quickly verify the relevant information directly at the source.
  • Specialises in employment screening: Validata has specialised in employment screening since 2009. Due to our many years of experience, we offer a fast and efficient screening process with the best possible candidate experience.
  • Specialised in employment screening for the financial sector: Validata has been providing screening solutions to the financial sector since its establishment and therefore serves a large number of financial institutions. Besides our sector knowledge and years of experience, we are also aware of the current laws and regulations that financial institutions need to comply with.