AFM shares SREP results in first Market View
The Supervisory Review & Evaluation Process (SREP) is a periodic survey of investment firms. In 2023, the Dutch Authority for the Financial Markets (AFM) sent two questionnaires to about 250 investment firms. The AFM is now publishing the results of this survey, along with market-wide feedback, in its first SREP Market View. Companies can use this information to see how they might improve their operations. The next SREP survey will be held in September 2024.
SREP provides insight for supervisors and the sector
The primary focus of the AFM’s SREP surveys is on aspects related to controlled and sound business operations, which is a broad scope. With this in mind, the AFM has chosen to request information on the various aspects – which include risk management, outsourcing, remuneration policy and leadership & culture – using a phased approach. The contents of this modular section can be adjusted in response to current events, societal changes, and legislative and regulatory developments, among other things. The results of the SREP are used to develop a market view, which the AFM and De Nederlandsche Bank (DNB) use for their supervision. Companies can use the information to benchmark themselves against their peers and make improvements where necessary.
The first SREP Market View takes a closer look at ICT risk management, policy, the Product Approval & Review Process (PARP) and asset segregation. Initial observations show that a third of investment firms have room for improvement in their ICT risk management framework, and that over 20% of companies incorrectly believe that the PARP does not apply to them. Although more than 90% of respondents claim to have an internal risk management policy in place, this is not reflected in the implementation scores. Moreover, one in five management companies have yet to develop policies on topics such as financial transactions with executive directors (including loans) and whistleblower protection.
Next survey in September
The next SREP survey is scheduled for September 2024. An announcement letter will be sent out early that month. This SREP survey will focus on topics such as remuneration policy, incident management and outsourcing. Companies can expect to receive the survey at the end of September, after which they will have six weeks to complete it. There will also be an opportunity to ask questions during an online session in October.
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