FSMA publishes its 2013 annual report

Press release

The Financial Services and Markets Authority (FSMA) has published its annual report for 2013. The presentation of the annual report focused particularly on the results of the inspections carried out, the new rules for financial products, the initiatives concerning financial education and the many new competences of the FSMA.

The 2013 annual report provides explanations concerning the FSMA’s activities during its third year of operation since its creation in April 2011. The report gives details on the activities carried out within each of the six fields of competence of the FSMA. These six fields of competence are supervision of information disseminated by companies, product supervision, supervision of compliance with the rules of conduct, supervision of financial service providers and intermediaries, supervision of supplementary pensions and financial education.

During the presentation of the annual report, four domains were discussed in particular:

1.    Inspections

  • On-site inspections. The FSMA completed in 2013 a first cycle of inspections on the issue of conflicts of interest, an issue about which a report was already published last year. The second cycle of inspections, conducted in 2014, focuses on the so-called ‘duty of care’. These inspections are aimed amongst others at examining if banks and other regulated companies act in the best interest of their clients when they give investment advice or execute orders. During these inspections, the employees of the FSMA not only go to the head offices to control the procedures, but most importantly they go to the local branches to verify compliance with the rules in practice.
  • 57 orders. Within the framework of this second cycle of inspections, the FSMA noticed that improvements could be made in terms of compliance with the rules on the theme of the duty of care. The FSMA identified one hundred points for attention. Among these, 57 have led to an order, through which the FSMA enjoins the company concerned to adjust its way of working. The points for attention concerned, among other things, the evaluation of the client’s knowledge and experience and the use of an investor profile. The inspections covered 82% of the regulated companies[1]. All the companies concerned complied with the order and adjusted their practices. As for the previous cycle of inspections, the FSMA will publish a general report, which will address the points for attention concerning the rules on the topic of the duty of care.
  • Mystery shopping. The Belgian legislators decided to extend the inspection arsenal of the FSMA by adding to it the possibility to make use of mystery shopping. This possibility enables FSMA employees and/or external contractors to go to regulated companies without making themselves known. For this purpose, an external partner has been selected and a pilot project will be conducted in 2014. These missions will take place under the guidance of the newly created ‘Central Inspection Team’ of the FSMA, which will henceforth be responsible for the inspections of each type of controlled entity.

2.    Product supervision

  • Advertising supervision. Product supervision is being further developed. Henceforth, the FSMA supervises the new standardized pre-contractual information sheets that credit institutions must provide when marketing regulated savings accounts. Other types of advertising for such savings accounts must also be approved beforehand by the FSMA. Non-compliance with this obligation can lead to the imposition of administrative sanctions, which has already happened. The FSMA also supervises advertising for other financial products such as thematic citizen lending. Rules will also be developed in order to create a level playing field for advertising for each type of financial product.
  • Marketing ban. In addition, the FSMA issued a regulation introducing a ban on the marketing of certain financial products to retail clients. These products are life settlements (traded life insurance policies), financial products based on virtual currencies, and notes and class 23 insurance contracts whose return depends on an alternative collective investment undertaking investing in non-standard assets (e.g. wine, artworks, etc.). This ban becomes effective on 1 July 2014.
  • Introduction of a risk label. The FSMA also issued a regulation establishing the technical requirements of a risk label for financial products. This risk label will be required for the marketing of financial products to retail clients in Belgium. The regulation sets out the criteria used to categorize savings and investment products in one of the five classes on the risk label. The principle underlying the criteria is the degree of risk of not recovering one’s initial investment at maturity. The use of this risk label becomes compulsory as from 12 June 2015.
  • Simpler products. The moratorium on the distribution of particularly complex structured products introduced in 2011 continues to prove very useful. The volume of structured products issued since the moratorium has been launched remains more or less constant, while the complexity of the products has decreased considerably. Six products out of ten make use of two mechanisms or fewer to determine the product’s performance. This simplification of the products was the objective of the moratorium and can contribute to the restoration of consumer confidence.

3.    Financial education

  • At the end of January 2013 the FSMA launched its financial education programme with the launch of the portal. provides consumers with neutral, reliable and accessible financial information. Since its launch, the website has already had more than one million hits. The most popular parts of the website are the savings account simulator (>375,000 simulations), the pensions quiz (>100,000 participants) and the real estate simulator (>60,000 simulations since its launch at the Batibouw Salon in February). The Wikifin newsletter, which is published each month, already has 10,000 subscribers.
  • Campaigns. Within the framework of the Wikifin programme, the FSMA launched in 2013 two thematic campaigns. The first campaign focused on the theme of pensions and the second on real estate. On the occasion of this second campaign, a real estate simulator was added to the website and enables consumers to get a good estimate of the costs of a real estate project. There was also a Wikifin stand at the Batibouw Salon.
  • School. Another pillar of the Wikifin programme is collaboration with schools. Therefore the FSMA has developed educational material that will be tested in a number of participating schools during the next school year. For that purpose, calls for applications have been launched for pilot projects in both the Dutch-speaking schools and in the French-speaking schools.

4.    Extension of competences

  • New legislation. Through different pieces of legislation, the Belgian legislators have given many additional competences and supervisory tasks to the FSMA. These include the Twin Peaks 2 legislation, which extends the application of the MiFID rules of conduct to the insurance sector, supervision of credit to SME’s, supervision of financial planners, supervision of intermediaries and of consumer credit providers, and supervision of compliance with the provisions of Book VI of the Belgian Code of Economic Law, which takes over the provisions of the law on market practices and consumer protection.

The annual report (in French and Dutch) is available on the website of the FSMA. A printed copy of the report can also be requested via the website using the order form.

[1]     Calculated on the basis of the total number of operations for retail clients.