Operational supervisory practice – put briefly, where DNB and a supervised financial undertaking come into contact – consists of several types of activities:
- allowing a financial undertaking access to the market (for example by granting an authorisation);
- collecting information on supervised financial undertakings and assessing this information based on the supervisory requirements;
- guiding supervised financial undertakings and intervening where necessary, if supervision requirements are not being complied with.
In supervisory practice, specific attention is paid to communications to the supervised undertakings about supervisory frameworks, approach and findings.
Once a financial undertaking has been allowed access to the market, the supervisory practice consists in concrete terms of collecting and assessing information.
DNB collects information in various different ways, by receiving reports and documentation, conducting discussions and carrying out on-site investigations. More indirectly, DNB also uses information from analyses of developments in the financial sector and from contacts with other supervisory authorities. DNB can also make very specific requests for information from the institution itself as well as from other parties involved.
Based on the information, DNB carries out financial analyses. The information and analysis together form the basis for the judgement as to whether a financial undertaking is complying with the supervisory requirements. DNB will use its findings again in the operational supervision of the relevant financial undertaking.
The application of a risk-based supervision method means that the supervision requirements are geared to the risk profile of the undertaking. DNB has developed a risk analysis model for this purpose: the Financial Institutions Risk Analysis Method (FIRM). With the help of FIRM and the information available about a financial undertaking, relevant risks are identified and assessed. DNB uses the risk profile drawn up using FIRM to set priorities in operational supervision.
In supervisory practice, DNB works closely together with other domestic and foreign supervisory authorities. In the context of the Wft, it cooperates in particular with the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten / AFM). This cooperation includes:
- determining secondary legislation on subjects relevant to both prudential supervision and conduct of business supervision;
- exchanging information and determining concrete supervisory activities (e.g. in cases where AFM supervises an investment firm in its capacity as the authorising supervisor and DNB exercises supplementary prudential supervision of the investment firm);
- advance consultation on specific planned supervisory measures with significant impact.
The cooperation between DNB and AFM is described partly in the Wft and partly in a separate agreement. In cases involving financial undertakings operating internationally, DNB also cooperates with the supervisory authorities in the other countries where the undertaking is active.