Review exit plans for payment and electronic money institutions

Every payment institution must have an exit plan to anticipate any termination or transfer of payment service activities or the business in a timely manner. The goal is to ensure that, if winding-up actually occurs, funds can be paid out or transferred in a controlled manner with minimal adverse consequences for payment service users and other beneficiaries.

Because many new payment institutions have entered the Dutch payment market in recent years, a review has been carried out in recent months of the exit plans of a selection of institutions. This resulted in the following points of attention.

An up-to-date exit plan

It is important that every institution regularly updates its exit plan and also uploads that plan in MyDNB. In this way, an up-to-date exit plan is available when it unexpectedly proves necessary, at both DNB and the institution.

Have a realistic time schedule

Part of the winding-up of a payment institution is the return of safeguarded customer funds to all customers. This can take time, especially when there are payment blocks or less active customers. In the first case, access to a payment account is temporarily or completely stopped because, for example, there is a suspicion of fraud or money laundering or when there is an incorrect billing address. In the second case, practice shows that institutions need more time than initially estimated. However, a license can only be handed in when all customer funds have been paid out.

Take into account dependence on other parties

Dependence on group entities and/or third parties are often not included in an exit plan. These dependencies should be considered in all scenarios. Indeed, any problems faced by these parties may affect the Dutch entity to varying degrees, in particular if the winding-up processes rely on outsourced services. This should be included as a factor and/or trigger, but also in the scenarios. On the other hand, it may be the case that an institution needs more time or more help from these other parties during a resolution than initially expected or than previously agreed. Whether there is room for this is something that institutions should already discuss and record with these other parties.

Exit scenarios

Most payment institutions mention a sale or an orderly winding-up as an exit scenario. However, an unplanned bankruptcy or unexpected major financial problems (for the parent company) does not always seem to be considered in the planning of scenarios, while such a situation often requires an action plan that can be implemented quickly and sufficient liquidity. It is also important that the exit scenarios are clear: in the event of a sale, it is not always evident whether it concerns a sale of the entire institution or of parts of the institution and/or customer portfolios.

Exit costs

During a winding-up, costs must not only be incurred for the winding-up itself, but also for the continuation of payment services during this period. In addition, an institution must always continue to meet the minimum capital requirements until a license has been handed in. It is therefore important that an institution has sufficient financial resources to be able to meet these requirements.

Open Book Supervision

As a result of the review carried out, the explanatory notes on Open Book Supervision have been amended in parts.