Like certain other EU countries, financial supervision in the Netherlands is based on the so-called twin peaks model. The first peak is formed by prudential supervision consisting of supervising the liquidity and solidity of financial companies. This supervision is exercised by the Dutch Central Bank (De Nederlandsche Bank or DNB). DNB carries out its supervision of banks as an ancillary supervisor to the European Central Bank (ECB). As supervisors, DNBs and the ECBs aim is to ensure the solidity of the Dutch financial system as a whole by, for example, regulating access to financial markets and supervising compliance with capital requirements.
The second peak is formed by market conduct supervision, which supervision is exercised by the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten or AFM). Market conduct supervision is aimed at regulating the way in which market participants conduct their operations. The AFM aims to promote orderly and transparent market processes, proper treatment of consumers and fair relationships between financial undertakings.
These twin peaks also correlate with what is generally recognized as the functions of financial supervision: (i) systemic supervision; (ii) commercial supervision; and (iii) conduct supervision. As a result, responsibilities are not centralized but allocated between the different supervisors:
The European Supervisory Authorities (ESAs) — i.e., the European Banking Authority, the European Securities and Markets Authority, and the European Insurance and Occupational Pension Schemes Authority — have limited supervisory powers in the Netherlands. However, they play an important role in drafting and issuing technical standards and preparing guidance relating to various European directives and regulations. The ESAs aim to accomplish efficient and harmonized financial supervision across the EU.