Policy Programme 2018

Transcription

1 Policy Programme 2018

2 A sector in transition The Dutch banking sector is in transition. Customer behaviour is changing: bank customers are becoming more digitally adept; they want more control over their financial affairs, and they want to be able to do their banking whenever they wish using digital applications. In this changing landscape, banks can respond by offering new digital products and services. The result is not only a new style of customer relationship, but increased trust across the sector. In 2017, as in 2016, customers trusted their own bank more than they trusted the sector as a whole. On a scale of 0 to 5, customer s confidence in their own bank was 3.2, with the sector scoring 2.9. In 2016, these scores were 3.2 and 2.8 respectively. The percentage of customers who trust their own bank increased marginally from 36% to 37% in these two years. The Dutch Banking Association (Nederlandse Vereniging van Banken, NVB ) is the link between the country s banking sector, political representatives and society. It helps to ensure an active and sustainable financial sector. Our aim is to close the gap between banks and society by providing a forum for discussion between all the parties involved in the financial sector. We proactively engage with stakeholder organisations, legislators, regulators and supervisors at the national and international levels. For example, we are working with the government to utilise the opportunities presented by the third Rutte Cabinet for instance, together we are ensuring that the Netherlands achieves a 49% reduction in CO 2 emissions by The energy transition is one of several significant shifts underway in the Netherlands. Another crucial change, and one in which banks are playing a leading role, is the transition to the digital economy. In a digital economy data is a commodity, and ensuring that client data remains the property of the client is critical. The creation of the digital market is a priority for the European Commission. It intends to legislate to protect the privacy of citizens and, at the same time, improve access to electronic goods and services. Banks have a key role to play, given their responsibility to not only manage customer data with due care but also to make this available to third parties in the future, where customers want this. Finally, regulation not only offers opportunities to banks, it also places demands on them. Legislation such as Basel 3.5 and IFRS9 are pushing up costs in the sector. At the same time, banks business models are under pressure because interest rates have been low for so long. The raft of global regulation is intended to reinforce financial solidity and enhance the sector s innovative potential. We consider it crucial to initiate a dialogue with society so that we can continue to discuss people s expectations and preferences. The banking sector also talks to regulators and supervisors about how regulation and supervision could best serve the sector and society as a whole. This policy programme outlines the role the NVB intends to play in Dutch Banking Association 2

3 Theme Digitisation Technological change has given rise to a new reality where banks and other service providers, like fintechs, operate in tandem. Over the coming period, we expect considerable discussion about legislation and regulation, and its expected impact. In 2018, European regulation will come into force in relation to making payment data available to third parties with the aim of improving customer service. In May 2018, the General Data Protection Regulation (AVG) will come into force. Further legislation and regulation to supplement the AVG is expected, including the Dutch implementation act to ensure that banks fully and correctly apply the AVG. What will be the role of banks in handling big data? They want to engage in an exploratory dialogue with major stakeholders, such as the Dutch Data Protection Authority and consumer organisations. That dialogue, which started in 2017, will continue this year. As part of efforts to improve and protect privacy, the third Rutte Cabinet will seek to give citizens more control over their personal data. Users of government services may be given the right to designate socially-relevant organisations that would be permitted to receive a limited set of personal data automatically. As such, citizens will be given responsibility for deciding which information may be released from government registers. In 2018, NVB intends to work with the government to produce concrete solutions to help achieve the aims of the government. Additional specific steps may include modifying regulations for electronic banking, such as digital onboarding, biometrics and crowdfunding. Furthermore, NVB wants to capitalise on policyrelated activities arising from the European Commission s fintech agenda. Theme Financial robustness The financial robustness of banks remains an important issue, as they continue to push on with the implementation of new regulation in The aims of this regulation include improving the health of balance sheets and strengthening financial stability. If the Basel 3.5 proposals result in an agreement, this is bound to have a major impact on Dutch banks, particularly those currently using internal models. It is possible that low-risk products, such as domestic mortgage loans and well-structured project funding, will be reclassified as high-risk financing under the new agreement. This, in turn, will require larger capital buffers. At the time of writing, however, no agreement has yet been reached in Basel. And even when an agreement is reached, the new standards will then need to be translated into EU regulation, meaning that the EU could still opt to implement certain elements differently. Internationally, NVB is striving to retain risksensitive capital requirements. In view of the possible implementation of Basel 3.5, we will continue our dialogue with both the European Commission and the European Parliament. A central issue in those discussions will be limiting any adverse effects on risk assessment under Basel 3.5. In 2018, the new accounting standard IFRS 9 will be implemented. This should address criticisms that losses are identified too late and/or inadequately in financial statements, requiring banks to make provisions for this earlier. NVB is consulting with regulators on the impact on bank capital of implementing IFRS 9, and will present its ideas on how to implement the new standard in stages. Implementing IFRS 9 will require considerable time and attention from banks. Dutch Banking Association 3

4 Theme Regulatory pressure In addition to cooperating with policy makers, NVB is trying to align the practice of supervision with that of the banks. For example, we are working closely with DNB (the Dutch Central Bank) to satisfy reporting requirements from Frankfurt and Brussels. In 2017, the Netherlands Court of Audit investigated the supervision of banks in the Netherlands. This inquiry revealed that the burden was proportionately higher for smaller banks and banks with a low-risk profile. Banks benefit from unambiguous definitions, timely requests and the elimination of duplicate requests. In 2018, NVB will lobby for proportionality in reporting requirements. This applies both to the banking sector as a whole and to the size of an individual bank. At the European level, in 2018 NVB will work to establish a framework for the support or winding down of a bank in the face of actual or impending bankruptcy. To this end, contacts with the Single Resolution Board (SRB) are being strengthened. In addition, proposals for a European deposit guarantee scheme will be revived in 2018, and NVB intends to provide constructive support. Nationally, we are involved in implementing the EU directive governing Deposit Guarantee Schemes (DGS). Theme Security Banks and their customers frequently contend with fraud and other types of financial-economic criminal activity. These include money laundering, mortgage and property fraud, the funding of terrorism, fraud using mobile and Internet banking and bank cards, and physical criminal activities, such as raids on cash dispensers. Customers are increasingly falling victim to non-banking financial fraud and Internet confidence tricks. These include fake s, fake apps and websites, fraud involving online commerce, invoicing fraud, identity theft, and misleading companies financial staff, known as CEO fraud. In consultation with the Dutch Payments Association, NVB will continue to warn consumers and businesses about all types of fraud in Due to their unique role in handling data on financial transactions, banks are important social actors and play a vital role in combating money laundering and terrorism financing. Accordingly, legislation is needed that enables banks to play this role efficiently and effectively. In 2018, legislation will be introduced obliging companies to register their ultimate beneficial owners (UBOs). The register will be a key source of information for investigation agencies, supervisory authorities, and the banks themselves. To effectively combat money laundering, the funding of terrorism, and fraud transparency is essential regarding those who exercise control over a legal entity. It is therefore disappointing that, in the legislative proposals under discussion, banks will not have access to all the information in the register, which they will need to discharge their statutory duties. Accordingly, NVB will continue to advocate for proper laws and regulations. These include the Framework Act for the Exchange of Data and other initiatives for public-private collaboration to combat criminal activities. The point is to enable banks to do their jobs as gatekeepers effectively. Banks continue to be concerned about the increasing violence that is a feature of ram raids. In 2017, solid explosives were used in virtually all such attacks. Over the past few years, banks have invested a great deal in preventive measures. It is crucial that cash remains available to customers and the general public. Banks are focusing on safety, preventing ram raids, and collaborating with law-enforcement agencies. In 2018, as before, the banks and NVB will make every effort to prevent violent attacks and support law enforcement agencies in quickly apprehending those responsible for such raids. The Cyber Security Assessment Netherlands 2017 report (CSBN 2017), shows that although government, the business community and the Dutch Banking Association 4

5 public have taken many steps to enhance their digital resilience, these do not go far enough. According to the report, digital resilience in the Netherlands continues to fall short in the face of the increasing threat. A survey conducted for the Dutch Payments Association shows customers average score for the security of electronic banking and payments is 7.8. Nine out of ten participants rate the security of their electronic banking as satisfactory or better. Although the steps that individuals can take to prevent fraud are generally well-known, they are not always followed. In 2018, as well as keeping banking infrastructure secure and informing customers of protective measures, NVB, in consultation with the Dutch Payments Association, will assess the risks and potential of technological innovation in the area of crime control. Theme Sustainability The effort and performance of the banking sector in 2018 with regard to sustainability will centre on four themes: climate change, sustainable development (including goals), human rights and transparency. NVB will help pave the way for joint activities in the field of climate change, collaborate with the government on developing the new Energy Agreement, and publish the results relating to banks in the climate change statement. To measure is to know (Meten is Weten) is a leading initiative launched by banks and NVB to meet the Paris climate change goals. It will concentrate on providing transparency in the climate change impact of the investments that banks make. In this respect, we expect the government to act as a facilitator. The new cabinet s target of a 49% reduction in CO 2 emissions matches the ambition of the banking sector. To achieve this target, we will continue to collaborate with the government and other relevant actors in 2018 by, for example, funding alternatives for CO 2 sequestration. Given the current regulation requiring office buildings to have at least energy label C by 2023, ensuring that buildings are sustainable will be an important task in In addition, we are looking at ways of collaborating with the government on building-related financing introduced by banks. For next year, the focus will be on implementing the Internal Corporate Social Responsibility (IMVO) covenant which covers human rights in the banking sector. This will include publishing initial collective individual obligations. A pilot advisory panel on responsible banking will also be established. This panel of independent experts will conduct case studies to learn how to optimise socially responsible banking in the fields of the environment and human rights. Theme Banks in society One in ten households in the Netherlands has debt problems, which means that it is extremely important to tackle this issue. In 2018, NVB will do this by, for example, harmonising the criteria for consumer credit with those for mortgage loans. This year will also see the start of a dialogue with stakeholders to identify opportunities to reduce household debt. The debt problem specifically among young people is an important ongoing issue, as is clear from the aims announced by the new government. The government intends to prioritise prevention over solving existing debt problems. In collaboration with other parties, education programmes are being developed with the goal of preventing debt. At the same time, it is extremely important for children to learn how to handle money at an early age, since this lays the foundation for financial independence in adulthood. We are therefore talking about a combination of amassing knowledge, skills and behaviour. NVB s programmes Bank voor de Klas (Banking for the class) and Ik en Geld (Money and me) are producing good results. In 2018, we will establish a public forum so that the sector can maintain a permanent dialogue with society. The forum will bring together bank Dutch Banking Association 5

6 executives and customers to discuss matters of social relevance, such as financial independence for the elderly. The forum will deliver specific proposals that will then be followed up with active support. standards are set out, and customers can require banks to abide by these. NVB is introducing standards for all banks to apply when dealing with customers, providing them with information, and servicing credit facilities. Theme Lending In 2018, banks are again ready to play their part in financing all areas of the economy, from small and mid-size businesses, to large-scale investing for the transitions that the Netherlands faces, such as in energy and digitisation. The industrial sector is once again performing better. Banks want to be the partner of choice for business owners, and they also want those businesses to remain loyal as they realise their ambitions. Where banks cannot provide all or some of companies financing requirements, their role can include providing businesses with sound investment plans in relation to complementary or alternative types of finance. At the same time, banks will continue to seek contact with sectoral associations and other important stakeholders, in order to jointly help business owners to improve their knowledge and skills in financing. Naturally, we remain closely involved with the establishment of Invest-NL, a Dutch institution for development and investment. Invest-NL gives businesses access to a single helpdesk for risk capital, guarantees, export credit insurance, and international financing programmes. Banks are also involved in deciding how best this can be organised. In order for the sector to play a leading role in hybrid financing, it is important that the new cabinet provides clarity regarding the extent of the duty of care, particularly in the case of small and mid-size companies. In 2018, banks will make a significant contribution in this regard with the introduction of the code of conduct for small-scale financing (Gedragscode Kleinzakelijke Financiering). Its purpose is to provide small businesses with greater certainty and clarity about the services that banks offer, thereby helping to enhance confidence in banks. Clear In 2018, the disputes desk for small-scale financing (Geschillenloket voor kleinzakelijke financieringen) will be established. It will be run by Klachteninstituut Financiële Dienstverlening (Kifid), the Dutch organisation that handles complaints regarding financial services. The desk will be a place for companies in dispute with their bank to submit their case to an independent party. A business owner must follow the complaints procedure of the bank in question (including escalation) before approaching Kifid. The purpose of the desk is to enable business owners to have disputes with banks assessed cheaply and without recourse to the courts. The code of conduct for small-scale financing (De Gedragscode Kleinzakelijke Financiering) and the disputes desk will help to promote long-term relations between banks and their customers, including in the unfortunate event that issues arise. Small or mid-size businesses can experience problems concerning services associated with interest rate derivatives. In 2016 an independent commission established a recovery framework for such situations. This is known as the Uniform Herstelkader Rentederivaten MKB (standard interest rate derivative recovery framework for small and mid-size businesses). Banks are striving to present eligible customers with proposals to settle the contracts in question by the end of Where necessary, NVB is facilitating discussions between the banks, the derivatives commission, the Dutch Authority for the Financial Markets, the Ministry of Finance, and civil-society stakeholders. The responsible provision of credit facilities has not diminished in importance, both in the granting process and throughout the duration of these facilities. For this reason, we will continue to develop policy for those trapped in continuous credit, what is known as the locked-in problem. Dutch Banking Association 6

7 NVB is committed to stability and predictability in the mortgage market. It regards the criteria for granting mortgage loans primarily as a set of instruments for tailoring these to suit individual situations. Even in a changing market, the focus must remain on the financial well-being of the customer. In 2018, NVB will proactively help to raise awareness among customers with interestonly mortgage loans, including through the involvement of the relevant stakeholders. Theme Asset growth Social change, such as increasing individualisation and devolved forms of government, means that Dutch consumers have new and widerranging financial needs. This requires more customised financial planning, as well as products that are tailored to consumer needs. Various studies confirm the importance of addressing these developments and aligning the regulatory framework to customer requirements. The core issue is how to make sure that householders have sufficient liquid resources at their disposal throughout the various stages of their lives in order to remain financially independent. For the pension system of the future, choices have to be made. These concern greater transparency, closer alignment with the labour market, and greater harmonisation with people s individual circumstances and preferences. For this system, the new cabinet intends to move away from theoretical entitlements that result in disappointment, and towards the accumulation of individual pension capital. In light of these developments, as well as an increased focus on long-term investments and intended changes to the pensions system, NVB s objective is also for banks to be able to offer products and services for the accumulation and payment of secondpillar pensions. This will be subject to the requirement that banks will not be required to offer the payment of whole-life benefits, but only fixed-term annuities, for example, for 25 years from the retirement date. In addition, in 2018 NVB will focus on overseeing the effective launch of the Pan-European Pension Product (PEPP). This product is for voluntary contributions to third-pillar pensions. It will give the financial institutions supervised by DNB the opportunity to offer consumers anywhere in the European Union a good-quality, transparent pension product. Moreover, the government may consider employing a simplified tax regime for PEPPs one that is not based on the principle of deferred taxation. This would facilitate the urgently-needed simplification of Dutch tax legislation. Theme Diversity and inclusion Investing in a diverse culture can make an organisation stronger, and a more attractive place to work. The inflow, retention and upward mobility of employees irrespective of age, gender, sexual orientation, cultural, ethnic or religious background, or work limitations provide a sound basis for diversity. And not just diversity in demographics, but also in terms of thinking, feeling, acting and capacity for knowledge. By taking maximum advantage of the benefits that diversity can bring, the sector can better reflect the society in which it operates. This, in turn, will help banks make progress in their aim of continuing integration with wider society. Several banks have signed the Diversity Charter, acknowledging the importance of diversity and inclusion, and committing to promote diversity in the workplace. This is a voluntary commitment to promoting one or more dimensions of diversity, specifically in the form of measures that the organisation itself defines and which are linked to its business goals. The Diversity Charter enjoys the support of the knowledge platform Diversiteit in bedrijf (Diversity in business), an initiative of the Dutch Labour Foundation. In addition to this Charter, banks are addressing diversity and inclusion in a variety of other ways. Dutch Banking Association 7

8 The challenge for 2018 is to continue working towards a culture where diversity is the norm and where it can make a real difference. A culture that no longer involves singling out groups of employees for special attention, but a culture where everybody feels their talents are welcome and which provides a sense of motivation. Banks can work on this together, learning from each other by organising roundtable sessions where experiences are shared with the aim of making further advances. January 2018 Dutch Banking Association Gustav Mahlerplein MS Amsterdam The Netherlands