Trustworthy and suitable directors and other policymakers help to maintain a stable and sound financial sector. The objective is a sector where accountholders, investors, policyholders, members, clients and other stakeholders may trust the financial undertakings and pension funds they deal with. Pre-appointment screening of candidate policymakers helps to ascertain their personal suitability and integrity. For companies with an authorisation based on financial supervision legislation, screening is mandatory. Financial supervision legislation defines the persons eligible to be screened in various terms. This fact sheet, however, uses the generic term 'policymakers'.
The procedure in summary:
- The supervised institution notifies DNB of the prospective appointment of a policymaker using the online Prospective Appointment Notification Form (hereinafter referred to as the Notification Form).
- If the person concerned has not yet been tested for integrity before, he/she completes the online Integrity Test Form.
- The completed forms are signed and, together with the annexes, they are sent as hard copies to the address shown on the form. Any annexes added must be indicated on the forms.
- Within two weeks, DNB acknowledges receipt of the forms.
The personal integrity of policymakers is a link in the overall integrity of the financial sector. Safeguarding policymakers' personal integrity requires that the candidate is subjected once (in principle) to an integrity screening. The particulars DNB needs to carry out the screening are listed on the Notification form. Integrity screening is mandatory for persons determining an undertaking's (day-to-day) policy, but also for those co-determining policy, such as supervisory directors and some shareholders. Once a person has been screened and appointed, each subsequent appointment or change of position will only require submission of the Prospective Appointment Notification Form and relevant documentation.
Mandatory reporting of changes in antecedents
A supervised financial undertaking must report any relevant change in the antecedents of its policymakers to DNB, without delay. It can do so only if the policymaker, in turn, reports such changes without delay to the undertaking. Reporting a change in antecedents may entail rescreening for integrity or suitability. The Integrity Screening Form lists the reportable types of antecedents. Supervisors regard a failure to report a change in antecedents a grave omission.
Screening for suitability takes place under the 2012 Policy Rule on Suitabilityof DNB and the AFM. This Policy Rule outlines the screening procedure and the range of information and antecedents considered by the supervisor. The Policy Rule applies to policymakers of all undertakings that are supervised by DNB and/or the AFM under the Financial Supervision Act, the Pension Act, the Mandatory Occupational Pension Act, the Audit Firms Supervision Act or the Act on the Supervision of Trust Offices.
Suitability screening takes account of:
- the policymaker’s position
- the nature, scope, complexity and risk profile of the undertaking
- the composition and functioning of the undertaking's joint policymakers.
Suitability screening does not adhere to the one-off screening principle, because a policymaker's suitability depends on their specific position, on the corporate environment and on the joint body of policymakers in which they are to fulfil their role. For the same reason, the undertaking must also provide a suitability matrix for the entire body of directors. Whenever any of the relevant aspects changes (e.g. appointment to a different position or enlargement of a person's portfolio) then the undertaking must report this to DNB using the Notification Form.
Suitability screening for Supervisory Board members as of 1 July 2012
With effect from 1 July 2012, suitability screening applies also the members of supervisory bodies such as members of corporate Supervisory Boards and boards of auditors, or non-executive board members. For simplicity's sake, we will use the term 'supervisory directors' here. Such officials will now be screened for suitability prior to being appointed. Supervisory directors already appointed but never screened for suitability will have to be screened before being reappointed, but no later than by 1 January 2016. Together with the screening form, the undertaking must provide a suitability matrix of its Supervisory Board. For this purpose, you may use DNB’s Supervisory Board Suitability Matrix format.
It is essential that the completed suitability matrix is accompanied by an explanation, i.e. additional information about the scores in the matrix for all members of the collective. We are interested to know why the various members in the collective give themselves a low, medium or high score; a proper explanation provides us with good insight. Examples could be descriptions of relevant on-the-job experience or courses followed.
Simultaneously with the introduction of this new requirement, the term 'competence' has been replaced by the term 'suitability'. The change of terminology does not imply a change in substance of the screening, but is more in line with what the screening intends to establish. Someone who is unavailable much of the time, for instance, may be competent but not suitable to hold a position as supervisory director.
The 2013 Regulation on the financial sector oath or promise under the Financial Supervision Act
The 2013 Regulation on the financial sector oath or promise under the Financial Supervision Act [Regeling eed of belofte financiële sector Wft 2013] will take effect on 1 January 2013.
It applies to determiners and co-determiners of policy and supervisory board members of financial undertakings.
The regulation entails that the person to be appointed takes an oath or makes a promise within three months after their appointment. The person to be appointed states on the Prospective Appointment Notification Form that they will take the oath or make a promise within three months of being appointed.
The following policy rules are especially relevant to integrity and suitability screening:
2012 Policy Rule on Suitability Expertise (Beleidsregel Geschiktheid 2012)
Decree on Prudential Rules for Financial Undertakings [Besluit prudentiële regels Wft], Annex A.
Pension Act [Pensioenwet or Pw] and Obligatory Occupational Pension Schemes Act [Wet verplichte beroepspensioenregeling, or Wvb]: Annex to Section 32 of the Decree on the Implementation of the Pension Act and the Obligatory Occupational Pension Schemes Act
Act on the Supervision of Trust Offices [Wet toezicht trustkantoren or Wtt]: Annex A1 to the Policy Rule on Integrity Screening.
The legal period within which DNB is required to perform the screening depends on the relevant Act under which a person is being screened. In most cases, the period is six weeks. If DNB requests more information, the assessment period will be suspended from the time the request is made until the requested information is received. An assessment interview with the person to be tested is also considered to be a request for information. In general, DNB decides within four weeks following such an assessment interview. If the application is part of an application for an authorisation, an application for a declaration of no-objection or dispensation, the legal term of the relevant application – usually thirteen weeks – will apply. Further information about assessment periods can be found in the Annex to the Integrity Screening Form (The Procedure).
For the performance of the integrity and/or suitability screening, administrative charges are payable to DNB in the context of the Financial Supervision Act [Wet op het financieel toezicht or Wft]. Following the completion of the screening, the company will receive an invoice for these administrative charges. The administrative charges will be payable in full, even if the person to be screened decides to withdraw or is withdrawn before DNB has taken a formal decision. All-inclusive rates will apply if the screening forms part of an application for authorisation, a request for registration, an application for a declaration of no-objection, a request for a certificate of supervised status or an application for exemption or dispensation. For more information about the charges and current rates, please see the website of the Ministry of Finance.
Preferably, both forms are also submitted electronically (by clicking the relevant button at the end of the digital form). This allows DNB to take the screening into consideration more quickly. However, receipt of the physical, undersigned form counts as the official date of notification. As the forms are updated from time to time, please make sure you download the most recent version for completion. DNB does not take into consideration any older versions of the form.