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News Bulletin for financial enterprises in the Dutch Caribbean - Edition 3 
27 June 2013
Dear relation,
We are pleased to present you this third news bulletin for financial enterprises on Bonaire, Sint Eustatius and Saba.

If you prefer to read the news bulletin in Dutch follow this link:

  Link naar nieuwsbrief NL
Topics in this news bulletin:
  What should financial enterprises pay attention to when providing consumer credit?
  Items of attention in Self Assessment
The AFM will conduct a review of the quality of information
New in 2013: The AFM will start directors’ test

What should financial enterprises pay attention to when providing consumer credit?
The AFM conducted quick scan reviews of the provision of credit and appropriate advice in the provision of loans at various financial enterprises on Bonaire and Curaçao in May 2013. As part of this review the AFM also looked at whether the advice offered in relation to life insurance was appropriate. This review was a follow-up to a previous review during the AFM’s visit in November 2012. The AFM was mainly interested in seeing what progress the enterprises had made. Several financial enterprises showed they had achieved an improvement since the AFM’s previous review. However, the visit in May 2013 did lead to the following recommendations:

Make sure the advice is appropriate for the consumer

  • A financial services provider that advises a consumer must base its advice on the consumer’s financial position, knowledge and experience, objectives and risk appetite (see Section 5:7 Financial Markets (BES Islands) Act (Wet financiële markten BES). The gathering of information regarding the consumer’s objectives was assessed as reasonable to good. However, the inventory of the consumer’s financial position could be improved. Alimony is frequently not investigated and the consumers’ living expenses aren’t inventoried thoroughly enough. There is also room for improvement with regard to obtaining information on knowledge, experience and risk appetite.

Attention to excessive lending is still an issue

  • Regarding responsible lending, the AFM notes there has been little improvement at some enterprises since its last visit. The model for determining responsible lending was present in all the surveyed files. In some cases, however, the model was not completed correctly. Certain fields in the model – such as the type of household, pre-existing monthly debt service payment and effective interest rate – were wrongly or carelessly completed. If the model had been properly completed, in some cases this would have led to the maximum credit level being exceeded. So please take care to complete the model for the calculation of responsible lending properly;
  • When using the model to calculate the responsible level of credit to be provided, a number of enterprises are still using the nominal interest rate instead of the effective interest rate. There is thus a risk that too much credit will be provided. The maximum permitted effective interest rate of 24% may also be exceeded. See Section 7:20 of the Financial Markets (BES Islands) Decree (Besluit financiële markten BES) for the method to be used when calculating the effective interest rate;
  • The information provided to consumers prior to taking out a loan does not contain sufficient information regarding the effective interest rate. Under Section 7:6 Bfm BES, this information must state (among other things) the effective annual interest rate. Consumers must be properly informed regarding interest rates so that they clearly understand the costs of credit.
Items of attention in Self Assessment
The AFM received completed Self Assessments from all enterprises in February and March 2013. The AFM would like to inform you of the main generic items of attention:

  • A large number of intermediaries and credit providers have not formulated a policy for preventing money laundering and the financing of terrorism. This is a requirement under the Money Laundering and Terrorism Financing (BES Islands) Act (Wet ter voorkoming van witwassen en financieren van terrorisme BES). The AFM is contacting these enterprises to enquire how they will meet this regulatory requirement;
  • Several enterprises have no up-to-date description of their administrative organisation. An accurate description and record of the administrative organisation and internal control procedures is essential for honest and controlled operations. The description must naturally be updated and kept up to date at all times;
  • A number of enterprises that offer advice or intermediary services have not taken out professional liability insurance. This type of insurance is compulsory for intermediary services. The sum insured must be at least $50,000;
  • Several enterprises state that they have not fully completed the customer profile for advice and brokerage in life insurance. For life insurance (and also for risk-based insurance) it must also be proved that the advice given is appropriate. Also when giving this advice, the AFM expects enterprises to obtain (and record) information on the consumer’s financial position, knowledge and experience, objectives and risk appetite;
  • Some enterprises state that information such as their general terms and conditions is provided at the signing of the agreement. This is not correct. The customer should receive this kind of information before signing the agreement, so that he or she has sufficient time to form an opinion of the product and its associated terms and conditions;
  • Many enterprises state that they provide oral information in Papiamento and Spanish, while their general terms and conditions are only available in Dutch and English. Several websites are only available in English. The AFM wishes to note that all information must be clear and comprehensible for the customer in a language that he or she can understand.
The AFM will conduct a review of the quality of information
The AFM wishes to assess the quality of the information received by consumers before they sign a consumer credit agreement. The AFM is therefore sending a request for information to a number of credit providers. The selected enterprises will receive a letter from the AFM during the coming month.
New in 2013: The AFM will start testing properness
Under Section 3:1 Bfm BES, directors of financial enterprises must be tested for properness every three years. The AFM will start with testing the directors of intermediaries and credit providers that hold a licence from the AFM this year. The testing of directors of banks and insurers will be conducted by De Nederlandsche Bank (DNB).
If you have any questions as a result of this news bulletin, please send an e-mail to We will respond as soon as possible.

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