Players in the financial market are bound by strict rules. The provision of financial services in the Netherlands is in most cases subject to a licence requirement under the Financial Supervision Act (Wft). This law ensures that the interests of the customer are the main focus and that the financial services are suitable.
A licence can be applied for from the financial regulators: the Dutch Authority for the Financial Markets (AFM) or De Nederlandsche Bank (DNB). To obtain a DNB or AFM licence, a company must meet a number of conditions. For example, directors and supervisory directors are tested for reliability and suitability. Business operations must also meet a large number of legal requirements. Licences that are granted are included in the DNB or AFM licence register.
When do you need an AFM licence?
Companies that offer financial services or products, such as asset managers, crowdfunding, fund managers, banks, pension funds and insurers need a licence from DNB or the AFM in order to conduct activities in the Netherlands. There are different licences and registries for each type of activity.
The following activities require a licence from the AFM or DNB:
- Advising on a financial product.
- Mediating in a financial product
- Reinsurance mediation
- Acting as (sub)authorised agent in insurance.
- Advising and/or transmitting orders in units in investment institutions
- Offering credit
- Offering investment objects
Who issues the licence?
A licence must be applied for from the AFM or DNB. The AFM is responsible for supervising the conduct of financial enterprises and grants AFM licences to, for example, investment firms, crowdfunding, fund managers and financial serviceproviders. DNB conducts prudential supervision and issues licences to payment institutions and insurers, among others. Many financial companies are supervised by both AFM and DNB. When assessing directors and supervisory directors, the AFM and DNB therefore work together.
What are the costs for an AFM licence?
The costs of an AFM licence are divided into one-time costs and ongoing supervision costs. The one-off costs consist, for example, of costs for processing the application and for performing tests, such as the reliability test and the suitability test. Because the licensing authority performs work from the application, there are always costs associated with a licence application, even if an application is withdrawn or rejected. In addition, licenced parties owe annual fees for supervision by the AFM and DNB.
How does a licence application proceed?
Applying for a DNB or AFM licence is complex and requires thorough preparation. A licence can be applied for at the AFM portal or DNB’s Digital Desk. The application form and required documents can be submitted online. During the permit application, several steps are completed. Some steps are taken by the applicant himself, while other steps are performed by the AFM or DNB. For example, the licensing authority checks whether the application is complete, policymakers are assessed and an applicant may be invited for an interview. Most permits are subject to a statutory decision period of thirteen weeks. This period can be extended (under the General Administrative Law Act) by eight weeks if necessary.
If a licence is granted, it is entered in the public DNB or AFM licence register.
How is a licence application assessed?
To qualify for a licence, a company must meet a large number of requirements. These requirements are largely contained in the Financial Supervision Act (Wft). For example, a licence is only issued if a company meets the conditions for good governance and is financially sound (solvent). The exact conditions differ for each target group. Among other things, the structure of the business operations, equity capital and the suitability and reliability of policymakers are examined. Applications that are complete and of good quality have the best chance of success.
Do you want to apply for a licence yourself? Read our blog with practical tips for applying for an AFM or DNB licence, or download our step-by-step plan with the thirteen most important steps for a smooth licence application, including tips and pitfalls.
Want to know more?
We are happy to help you qualify your services and apply for a licence with the AFM or DNB. Please feel free to contact us for a free consultation.
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