Appointment of a caretaker

DNB and the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten / AFM) supervise compliance with the Wft (and related secondary legislation). To support effective supervision, DNB has various instruments at its disposal. For example, it has the power to gather information, give instructions and appoint a trustee.

In respect of whom can a trustee be appointed?

A trustee can be appointed in respect of all or certain bodies or representatives of:

• a financial undertaking (see Section 1:76 (1) Wft)
• everyone who attracts, in or from the Netherlands, redeemable funds from parties other than professional market parties (see Section 1:76 (8) Wft).

It is important to note that a trustee can be appointed not only in respect of licence holders but also in respect of every person who engages in activities covered by the definition of financial undertaking.

When can a trustee be appointed?

DNB may appoint a trustee if the Wft (or related secondary legislation) is breached. The order appointing a trustee may be made by DNB only:

• after an instruction has not been followed by the financial undertaking concerned or has not been followed completely within the prescribed period, or
• if the breach seriously jeopardises the adequate functioning of the financial undertaking, or
• if the breach seriously jeopardises the interests of consumers.

In the latter two cases the financial undertaking must first have had the opportunity to respond to the proposed order.

In addition, DNB may appoint a trustee if it considers that the own funds, solvency or liquidity of the undertaking are jeopardised. At this stage there is still no breach. The order appointing a trustee may be made by DNB on this ground only:

• after an instruction has not been followed by the financial undertaking concerned or has not been followed completely within the prescribed period, or
• if immediate intervention is necessary and the financial undertaking has first had the opportunity to respond to the proposed order.

NOTE: DNB may make use of this latter possibility only in relation to natural or legal persons coming under the definition of financial undertaking. A trustee cannot therefore be appointed in respect of natural or legal persons who, in the course of their business, attract redeemable funds from parties other than professional market parties as long as they do not infringe the Wft (this is a consequence of Section 1:76 (8) Wft).

If DNB wishes to appoint a trustee, it is obliged to seek the view of AFM (see Section 1:47 (2) Wft). The appointment order must contain a description of the interests by which the trustee must be guided (see Section 1:76 (5) Wft).

A trustee may be appointed for a term of no more than two years. This period can be extended for one year at a time.

Consequences for third parties

The appointment order is communicated to the financial undertaking. From the date of this announcement the bodies or representatives of the financial undertaking that are placed in trusteeship may exercise their powers only with the prior approval of the trustee. Orders issued by the trustee must also be complied with. If any person who is part of the body concerned nonetheless performs acts without having obtained the required approval of the trustee, he will in principle be jointly and severally liable for any loss or damage resulting from such acts.

The trusteeship is, in principle, a measure that is operative internally and does not affect juristic acts with third parties. However, where a counterparty knows or should know that a trustee has been appointed and nonetheless concludes a contract without the approval of the trustee, the validity of the contract may be contested. A decision to appoint a caretaker is open to administrative appeal with DNB.

Costs

Pursuant to Section 16(1) of the Financial Supervision Funding Act, we may charge the caretaker's fees to the financial institution concerned.

Publication of the decision to appoint a caretaker

We must publish a decision to appoint a caretaker in response to non-compliance as soon as it has become irrevocable, i.e. after completion of any objection or appeal procedure. Where applicable, we must also publish the outcome of a previous objection or appeal procedure.

The basic idea is that we publish a decision to appoint a caretaker in full, but there are some exceptions:

A decision to appoint a caretaker must not be published if publication would be disproportionate in view of the minor gravity of the non-compliance or if it were to jeopardise the stability of the financial system.

We sometimes defer publication of a decision to appoint a caretaker or anonymise it, so that it cannot be traced to individual persons or institutions. We do so when we can determine in advance that full publication meets one or more of the following conditions:

• The data would be traceable to a natural person, and disclosure of their personal data would be disproportionate.
• The parties involved would suffer disproportionate damage or loss.
• Publication would undermine an ongoing criminal or supervisory investigation.
• Publication could jeopardise the stability of the financial system.

We do not publish a decision to appoint a caretaker before five business days have elapsed after we have notified the financial institutions of the decision to appoint a caretaker or publish the instruction. If the institution files a petition for interim relief during this period, we suspend publication until the court has ruled in interim relief proceedings.

In urgent cases, we may decide to publish the instruction immediately without observing the five business days' waiting period.