First-step analysis: fintech regulation in Netherlands - Lexology
Financial regulation
Regulatory bodiesWhich bodies regulate the provision of fintech products and services?
There is no specific regulatory framework applicable to the provision of fintech products and services.
Furthermore, it is unlikely that such a specific Dutch regulatory framework will be established now that the Dutch Authority for the Financial Markets (AFM) and Dutch Central Bank (DNB) have issued the recommendation to regulate cryptos at an international level. As such, depending on the nature and scope of products and services offered, the AFM and DNB supervise compliance with conducts of business rules and prudential requirements respectively.
Regulated activitiesWhich activities trigger a licensing requirement in your jurisdiction?
Depending on the nature and scope of services offered, licensing requirements under the Dutch Financial Supervision Act (FSA) and secondary legislation may apply.
The following activities are regulated under the FSA.
- Deposit-taking and granting credits for one's own account: credit institutions (ie, institutions that attract repayable funds from the public in the Netherlands and that extend credit for own account) require a banking licence.
- Consumer lending: the extension of credit to consumers (natural persons acting outside their business or profession) requires a licence.
- Factoring, to the extent this would constitute consumer lending.
- Invoice discounting, to the extent this would constitute consumer lending.
- Payment services: all institutions carrying out payment services as described in the Annex to the Revised Payment Services Directive (PSD2), require a licence. A licence to act as a credit institution may also cover carrying out payment services.
- Investment services: a financial institution is required to have a licence if it intends to provide investment services. These can be split into the following services, carried out in pursuit of a business or profession:
- receiving and transmitting client orders relating to financial instruments (which includes bringing about deals in financial instruments);
- executing client orders relating to financial instruments;
- managing an individual's assets;
- providing advice regarding financial instruments;
- underwriting or placement with a firm commitment basis of financial instruments; and
- placement without a firm commitment basis of financial instruments.
- Investment activities: a financial institution is required to have a licence if it intends to perform an investment activity. Investment activities can be split into three activities:
- dealing on one's own account (including foreign exchange trading);
- operating an organised trading facility; and
- operating a multilateral trading facility.
- Clearing and settlement: acting as a clearing and settlement institution requires a licence.
- Secondary market loan trading.
Is consumer lending regulated in your jurisdiction?
Under the FSA, consumer lending requires a licence and is considered a financial product. Advising a consumer on a financial product or providing intermediary services in relation to such a financial product is only allowed if the institution has obtained a licence from the AFM. Financial institutions may be exempted if they have another licence that permits consumer lending or advising consumers on financial products.
Before entering a loan agreement with a consumer, the financial institution must provide the consumer with relevant information relating to the financial product, so that the consumer is able to properly assess the product. In addition, credit assessment rules exist to prevent consumer over-indebtedness. These rules are part of the overarching requirement that lenders exercise due care when providing these services.
Secondary market loan tradingAre there restrictions on trading loans in the secondary market in your jurisdiction?
Secondary market loan trading is only a regulated activity where it constitutes consumer lending.
Collective investment schemesDescribe the regulatory regime for collective investment schemes and whether fintech companies providing alternative finance products or services would fall within its scope.
In the FSA, collective investment schemes can be an alternative investment fund, as defined in the Alternative Investment Fund Managers Directive (AIFMD). Under the AIFMD, an alternative investment fund is a vehicle with or without legal personality, which raises capital from investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors. The AFM has confirmed that firms offering units in funds that invest in cryptocurrencies require a licence as an AIFM.
Alternatively, a collective investment scheme can be an undertaking for collective investment in transferable securities, as defined in the Undertakings for Collective Investment in Transferable Securities Directive.
Whether a fintech company would qualify as a collective investment scheme will depend on the exact nature of its business. For example, fintech companies that manage assets on a pooled basis on behalf of investors should give particular consideration as to whether they qualify as a collective investment scheme. On the other hand, fintech companies that provide advice or payment services may be less likely to constitute a collective investment scheme. Peer-to-peer lenders, marketplace lenders or crowdfunding platforms could potentially fall within the scope of the AIFMD, to the extent they would qualify as (managers of) collective investment schemes. Currently, the AFM's register 'Crowdfunding platforms' indicates that no crowdfunding platform holds a licence for managing or offering units in collective investment schemes.
Alternative investment fundsAre managers of alternative investment funds regulated?
Managers of alternative investment funds are regulated under the AIFMD, which has been implemented in the FSA.
Peer-to-peer and marketplace lendingDescribe any specific regulation of peer-to-peer or marketplace lending in your jurisdiction.
There is no specific regulation of peer-to-peer (P2P) or marketplace lending in the Netherlands. However, this activity might constitute a regulated activity under the FSA. For instance, if a platform facilitating P2P lending receives and transmits orders in financial instruments, it may be subject to a licensing obligation as an investment firm.
CrowdfundingDescribe any specific regulation of crowdfunding in your jurisdiction.
Current situationLoan-based and equity-based crowdfunding may trigger certain requirements under the FSA, such as the requirement to publish a prospectus or to obtain a banking, consumer credit or investment firm licence. Much will depend on the exact activities and model.
Crowdfunding platforms may apply for certain exemptions under specific circumstances, which can allow them to perform activities as an intermediary to attract or obtain the disposal of repayable funds from the public or, if the platform holds a licence to operate as an investment firm, they may be exempted from the prohibition on receiving commissions from third parties.
However, crowdfunding platforms should be aware that the AFM may attach certain conditions to licences or individual exemptions. For instance, the AFM may require that consumers have the right to reclaim their investment within 24 hours. Additionally, exempted crowdfunding platforms may still be subject to certain requirements in relation to governance and business operation policies.
Where a consumer invests in total more than €500 in a crowdfunding platform, the platform is required to administer a 'crowdfunding investment test' that meets certain preconditions in relation to that consumer. The outcome of this test is not strictly binding; however, in the case of a negative outcome, the crowdfunding platform is required to inform the customer on the related risks. The AFM also applies certain investment limits for consumers, ranging from €40,000 to €80,000 per platform, depending on the type of crowdfunding.
Situation after 10 November 2021On 10 November 2021, the EU Crowdfunding Regulation will enter into force. Among other things, this Regulation introduces a licensing regime for crowdfunding service providers (CSPs) that (1) facilitate granting of loans (excluding consumer credit); or (2) place without a firm commitment basis transferable securities and instruments issued by project owners or SPVs, and receive and transmit orders for crowdfunding purposes. However, if crowdfunding offers made by a particular project owner exceed €5 million over a period of 12 months, then the licensing regime for investment firms under MiFID II applies instead. CSPs that are currently permitted to provide crowdfunding services in the Netherlands will permitted to continue doing so until 10 November 2022. After this date, they require a licence from the AFM under the EU Crowdfunding Regulation.
Invoice tradingDescribe any specific regulation of invoice trading in your jurisdiction.
There is no specific regulation of invoice trading in the Netherlands. However, depending on the exact services provided and the status of the parties involved, invoice trading may lead to either party qualifying as an intermediary of consumer credit or may amount to the extension of consumer credit.
Payment servicesAre payment services regulated in your jurisdiction?
Yes. In the Netherlands, payment services are regulated on the basis of PSD2, which has been implemented in the FSA. A licence is required to carry out all payment services listed in the Annex to PSD2.
Payment services include:
- services enabling cash to be placed on a payment account or cash withdrawals from a payment account and all the operations required for operating a payment account;
- the execution of the following types of payment transactions:
- direct debits, including one-off direct debits;
- payment transactions executed through a payment card or a similar device; and
- credit transfers, including standing orders;
- the execution of the following types of payment transactions where the funds are covered by a credit line for the payment service user:
- direct debits, including one-off direct debits;
- payment transactions executed through a payment card or a similar device; and
- credit transfers, including standing orders;
- issuing payment instruments or acquiring payment transactions;
- money remittance;
- payment initiation services (initiating a payment order at the request of a payment service user with respect to an account held with another payment service provider); and
- account information services (online services to provide consolidated information on one or more payment accounts held by the payment service user with another one (or more) payment service provider).
Are there any laws or regulations introduced to promote competition that require financial institutions to make customer or product data available to third parties?
The implementation in the FSA of the access-to-account rules, as included in the PSD2, requires financial institutions to provide access to the payment accounts of clients to payment initiation service providers and account information service providers. In general, data protection and privacy regulations should be considered prior to making client data available to third parties.
Insurance productsDo fintech companies that sell or market insurance products in your jurisdiction need to be regulated?
The sale of insurance products is regulated under the FSA and requires a licence.
Credit referencesAre there any restrictions on providing credit references or credit information services in your jurisdiction?
The rules on credit rating agencies laid down in Regulation (EC) No. 1060/2009 on credit rating agencies (as amended) apply in the Netherlands. A credit rating agency is required to adopt, implement and enforce adequate measures to ensure that the credit ratings it issues are based on a thorough analysis of all the information that is available to it and is relevant to its analysis according to its rating methodologies.
Law stated date
Correct on:Give the date on which the above content is accurate.
21 May 2020.
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