AFM provides good practices for incident notification by investment firms

We launched the deep-dive review because of the relatively low number of incident notifications we receive. Since 2020, the AFM has paid extra attention to incidents at investment firms (with the exception of investment firms that exclusively perform investment activities) and firms that manage collective investment companies and/or UCITSs. The aim of the deep-dive review was to examine what causes the low number of incident notifications.

Firms’ policies, procedures and measures are not always adequate

Firms’ policies do not always clearly define what qualifies as an actual or possible incident. We also observed that there are considerable differences in the depth and scope of the respective definitions. Consequently, staff working on the basis of these policies are sometimes unsure which possible irregularities qualify as an incident.

In addition, we found that firms’ incident notification procedures and measures are not always adequate. At a number of firms, these procedures lacked a description of the roles and responsibilities involved and/or instructions on how and to whom staff should notify possible incidents.

There is room for improvement in traceability of decision-making

In our review, we also found that several firms had not or not adequately documented their decisions with regard to incidents. Firms need to be able to render themselves accountable for the decisions made by their management, including to supervisory authorities. That is why we recommend documenting these decisions – by recording them in the minutes of management’s meetings, for example.

Firms sometimes focus too much on operational incidents

In our review, we observed that firms that are primarily IT-driven have extensive procedures and measures for detecting, assessing and, where necessary, notifying incidents. Some of these firms have a rather strong focus on operational incidents. We have advised these firms that interpersonal incidents, such as inappropriate conduct in the workplace, also require attention.

Several firms rely heavily on the judgement of their staff

At some firms, it is largely left up to staff members to assess whether an event qualifies as an actual or possible incident. This creates the risk that such assessments are made in an ad-hoc and inconsistent manner. Several of the firms concerned stated that their staff are well trained, or that their firm has an ‘open culture’ where staff are not afraid to speak up. While that may be the case, we call on firms to provide their staff with clarity on what is expected of them by putting in place clear measures and procedures.

For the asset management market to function properly, it is essential that firms promptly notify any incidents to the AFM. These incident notifications enable us to actively respond to signals and to make a contribution to resolving issues. A healthy and properly functioning sector is important to firms and investors.

Meer informatie

Rapport 'Melden van incidenten' (pdf,240 kB)