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Belgian government plans to increase consumer proctection and strengthen supervisory powers of FSMA

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Kierszenbaum Sylvia
Sylvia Kierszenbaum

Partner - Brussels/Antwerp


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10 May 2013

Twin Peaks II announced by Belgian government: plans to increase consumer protection and strengthen supervisory powers of the Financial Services and Markets Authority (FSMA)

On 18 February 2013, the government approved a new package of measures (Twin Peaks II). The measures are aimed at increasing consumer protection and strengthening the powers of the Belgian financial supervisor (FSMA). A press release was published in this respect. The formal proposals will become publicly available at a later stage.

The package includes the following measures:

  • Extension of the conduct of business rules for financial service providers to insurance companies and insurance intermediaries: These service providers will have to act in a loyal, fair and professional manner and provide correct and clear information which is not misleading. The new conduct of business rules should apply to all financial products and services. The same level of protection should be available for investors in fund-linked insurance products as to investors in other financial products. Everyone who has contact with the investors should have the necessary product knowledge. The measures are aimed at creating a level playing field: the same level of protection should apply regardless of whether a product is bought by an investor through a bank, insurance company or intermediary.
  • Strengthening the supervisory powers of the FSMA: The FSMA will have the power to use "mystery shoppers" and to access certain parts of websites that are normally only available to clients.
  • Sanctions: The power of the FSMA to impose sanctions will be extended. The FSMA will be able to impose injunctions and to publish the fact that it imposes sanctions on financial institutions. The FSMA will also be able to ban the marketing of financial products and to impose labels.
  • Civil liability: The rules on civil liability will become stricter. A rebuttable presumption will be introduced with respect to breaches of conduct of business rules: the investor would no longer have to prove the causal link between the breach and the investment transaction. In other words, there will be a rebuttable presumption that the investor would not have made the investment, but for the breach of the conduct of business rules by the service provider. In addition, in the case of the offer of investment products without the required licence, or without pre-approval of a prospectus (or other required documents), the investor will be able to seek the nullity of the investment transaction.

The package also includes measures with respect to market abuse. Restriction can be imposed with respect to short selling and the sale of CDS. In exceptional circumstances, the FSMA will be able to restrict trades in certain financial products. Rules with respect to market manipulation are extended to manipulation through derivatives or CDS.