Order for incremental penalty payments imposed on BinckBank for infringement of product governance rules

Product governance to prevent misselling

The European Union has introduced product governance requirements to prevent product scandals and the misselling of products. The key principle underlying these requirements is that it is the investment firm’s responsibility to determine the appropriate target market for the product and then safeguard through a tailored distribution strategy that products are not sold to consumers outside the target market (on a regular basis).

BinckBank has repeatedly infringed these product governance requirements. More specifically, this concerns the following:

• BinckBank’s product governance policy is inadequate. This is because it is not sufficiently clear how BinckBank defines the target markets for its products in a way that gives sufficient consideration to the product characteristics and the degree of complexity of a product. In addition, it is insufficiently clear how BinckBank formulates an appropriate distribution strategy. Furthermore, the policy does not explain, among other things, how BinckBank checks whether the products are not distributed outside the target market on a regular basis.
• BinckBank’s evaluation of SPACs and options has been inadequate. This is because for both these product groups, BinckBank has failed to adequately determine the target market, there is no (substantiated) distribution strategy, and BinckBank does not evaluate whether it distributes the products only to clients in the target market and not (on a regular basis) to those outside it.

What is an order for incremental penalty payments?

An order for incremental penalty payments is an instrument whereby a company or person is ordered to undertake or refrain from certain actions. If the order is not complied with within the term set, a fine is incurred.

Compliance with order for incremental penalty payments

As per the terms set, as of 3 June 2022, BinckBank has: 1) two months to implement various changes in its policy; and 2) four months to carry out proper evaluations. If BinckBank fails to comply with the order within these terms, it will be required to pay a penalty of €250,000 for each element of the order it has not complied with. At the time of this publication, it was not known whether BinckBank has complied with the order for incremental penalty payments. AFM monitors compliance with the order for incremental penalty payments.

As BinckBank has not submitted an objection against the decision to impose the order for incremental penalty payments, it has become irrevocable. Therefore, it is no longer possible for interested parties to submit the AFM’s decision to the competent court for review.

You can download the full text of the decision from this page in pdf format. If you have any questions or complaints, please contact the AFM's Financial Markets Information Line: +31 (0)800 5400 540 (free of charge). Journalists may contact Yolanda Bieckmann, AFM spokesperson, on +31 (0)20 7972435 or at yolanda.bieckmann@afm.nl.

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