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Newsletter for financial enterprises in the Caribbean Netherlands

9th Edition - December 2015
Dear relation,
You are receiving this ninth Newsletter for financial enterprises on Bonaire, Sint Eustatius and Saba.

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

  Link naar de nieuwsbrief in het Nederlands
Topics in this newsletter:
  Announcement of new supervision themes for 2016
  Credit cards: annuity repayment method correct?
Closing fee: how should this be factored into the interest rate?
New in this newsletter: Your questions for the AFM

Announcement of new supervision themes for 2016
In 2016, the AFM will devote attention to two new supervision themes: tie-in sales and the amount of commission on life insurance. In January, we will send out requests for information to gain an understanding of how licensed companies in the Dutch Caribbean handle these matters. The AFM is giving the companies concerned six weeks to respond to the request.

With the new supervisory themes in mind, we ask you meanwhile to consider a number of key points in the relevant legislation:

Prohibition on tie-in sales
One of the provisions of Section 5:16 of the Financial Markets BES Islands Act (Wfm BES) forbids compelling a borrower to purchase an additional financial product from the same company where the borrower is concluding a credit agreement. If the purchase of an additional financial product is a requirement, then the borrower must be explicitly informed that he/she has the right to choose where to purchase that product.

Fees  intermediaries
Section 5:10 of the Wfm BES specifies among other things that the fee an adviser or intermediary receives from the provider of a financial product for financial services rendered must not be such that the interests of the consumer or client could suffer.

Precontractual information on life insurance commission
Section 5:5 of the Wfm BES stipulates that, before signing a contract, a client must be informed by the adviser or intermediary regarding the commission received by him/her from the product provider for services rendered. If a bank concludes a life insurance policy for one of its customers (thus acting as an intermediary), then the bank must also abide by these rules.

At the very least, an intermediary needs to tell its clients in good time before they conclude a contract how large the initial commission and the repeat commission per renewal are. This is a provision in Section 7:10 of the Financial Markets (BES Islands) Decree (Bfm BES).
Credit cards: annuity repayment method correct?
If a customer has a credit card, the AFM recommended until recently that, for calculating the size of responsible credit, an amount based on repaying the balance by the annuity method over a period not exceeding five years should be taken into account. We understand that in practice most credit card balances now have to be repaid within two years.

This stricter requirement ensures that the interests of customers are given more weight. The AFM is therefore changing its recommendation and is advising that a maximum repayment term of two years will be used for a credit card.

The amount to be used in the calculation should be at least 5% of the maximum that can be taken out on the card.

If the agreement specifies a higher repayment percentage for the customer, this higher figure has to be used in the calculation. After all, this is the customer’s actual monthly expense. If the agreement with the customer permits monthly repayments of less than 5%, the AFM nevertheless recommends using 5% in the calculation.

If the credit provider does not follow this method, the company is running the risk of the customer borrowing more than is responsible.

We have also updated our website with the above change, in the section “Frequently Asked Questions”.
Closing fee: how should this be factored into the interest rate?
The AFM has noticed that a closing fee or other costs are often charged when a loan is given. . Such a cost is sometimes a fixed amount, and sometimes a percentage of the loan or mortgage. A closing fee and other costs must be included when working out the maximum effective credit rate of interest. The effective annual rate of interest derived from the closing fee (and other costs) together with the interest payments is not to exceed 23%.

The Explanatory Memorandum to Section 5:13 of the Act clarifies the point as follows: "All costs that the lender charges the borrower in connection with the credit, that is, in addition to the effective rate of interest, all the other costs relating to the credit. These also include the costs of commitments that, as the case may be, must be undertaken in order to be eligible for the credit."

The precontractual information about the credit must make clear to consumers what the total costs of the credit are. They comprise the effective rate of interest on the credit, plus all the other related costs, if any. This derives from Section 7:6 of the Bfm BES and the accompanying information.
New in this newsletter: Your questions for the AFM
Do you have questions or know of topics you would like to see handled in this newsletter? For example, do you want to know the AFM’s views on a particular subject, are you looking for advice on how to comply with certain regulations, or need answers to questions you receive from your customers? In future editions of this newsletter, we will be pleased to address the topics you bring forward. You can send them to

We will publish all questions without revealing their source, so the name of the person or financial enterprise submitting a question will not appear in the newsletter. If you do want your name to appear, please state this in your email.
If you have any questions with regard to this newsletter, please send an email to
More information can be found on the Caribbean Netherlands website
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Best wishes for 2016    Feliz Aña Nobo
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