A Supervisory Regulation is a universally binding instruction, that is, a mandatory instruction. A mandatory instruction means that no allowance is made for the possibility that institutions might not wish or might not be accustomed to comply with the instruction. In the case of a Supervisory Regulation, an explicit basis in an Act or a General Administrative Order is required. An example of a Supervisory Regulation is the Supervisory Regulation on Solvency Requirements for Credit Risk and Large Exposures 2010 (Regeling solvabiliteitseisen kredietrisico en grote posities Wft 2010).
A Policy Rule, by contrast, is not a mandatory instruction. DNB is under no obligation to lay down Policy Rules. In the case of a Policy Rule, there is generally no legal basis, although the higher-order regulations must allow sufficient scope for drawing up a Policy Rule.
There are three types of Policy Rules:
- A Policy Rule regarding the manner of weighing up interests:
•Example: Section 3:57(7) of the Financial Supervision Act (Wet op het financieel toezicht) states that DNB may grant dispensation from one or more of the requirements set in that section if the institution demonstrates that it cannot in reason comply with these requirements or that the objectives which the section seeks to achieve are achieved in another way. In that context, DNB could lay down a Policy Rule setting out the manner in which it weighs up the interests involved.
- A Policy Rule regarding the ascertainment of facts:
•Example: The principles used in assessing the ICAAP of financial institutions (the supervisory review and evaluation process under section 3:18(a) of the Financial Supervision Act (Wet op het financieel toezicht)) have been laid down by DNB in a Policy Rule.
- A Policy Rule providing an explanation of statutory regulations:
•Example: DNB has laid down its interpretation of the concept of expertise under section 3:8 of the Financial Supervision Act (Wet op het financieel toezicht) in its Policy Rule on Expertise 2011 (Beleidsregel deskundigheid 2011).