DNB plans principles-based pensions supervision

NETHERLANDS - Dutch pensions regulator De Nederlandsche Bank (DNB) will ease its supervision on pension funds, banks and insurers in favour of monitoring compliance to principles, rather than strictly regulations.

The Dutch central bank made the comments in a report about supervision until 2010 published. It mentions the need for a culture change within the organisation itself, but also within financial institutions.

The sector and its products are becoming increasingly complex and in order to keep up with these developments the DNB thinks that a change will make its supervision more effective, a spokesman said.

Instead of ticking off a list with regulation compliances, the organisation moves its supervision to observing principles, which also demands that financial institutions themselves have a more active approach and realise what kind of responsibility they have, the bank warned.

In future, the scope and depth of the DNB's supervision will depend on the risk that a financial institution runs of getting into problems - an important risk factor is the integrity of the institutions and its policy maker according to the DNB.

"A considerable number of larger incidents with financial institutions in the past few years was directly related to integrity violations," the central bank said in the report.

The move follows criticism from figures such as Phillip Neyt, chairman the Belgian Association of Pension Institutions (BVPI). Neyt said in an interview with IPE recently that the Dutch regulator has "too many regulations" and is "too stringent". This criticism was echoed by various industry figures.

The spokesman said that the bank has tried to take such views into consideration when drafting the report, though dismissed that criticism pressured the regulator to make changes: "In any case it is good to review the supervision strategies and to look carefully at what we have - we have done this in 1997, and we thought we should do it again."

The DNB will retrain the 500 employees who are work in supervision, particularly the 400 employees who have direct contact with the financial institutions will need to become more active and assertive.
 

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