The legislation on financial supervision provides that integrity is an explicit objective of financial supervision. The statutory criterion for supervision is the integrity of the business operations, with particular emphasis on the financial soundness of the institution. A pension fund should structure its organisation in such a way as to ensure the integrity of its business operations.
Supervision of the integrity of pension funds’ operations is thus part of the prudential supervision exercised by De Nederlandsche Bank (DNB). Section 5b of the BES Pensions Act defines the standard for the integrity of business operations. This standard is then amplified in paragraph 3 of the BES Pensions Decree (the Decree). Article 9 of the Decree provides, among other things, that a pension fund must arrange for systematic analysis of integrity risks and adopt and execute an integrity policy on the basis of the findings of this analysis. The Act and the Decree therefore impose requirements on the management environment of pension funds with a view to managing the integrity risk.
What this means is that pension funds must avoid becoming caught up in illegal activities or activities that are socially unacceptable. The rationale is trust: to be able to operate well a pension fund needs the trust of the public. Integrity is one of the pillars of such trust. DNB checks the measures which pension funds have taken to manage integrity risks in their business operations.
In addition to the integrity of business operations, it is of great importance to the integrity of a pension fund that the directors are fit and proper persons. Section 5a of the BES Pensions Act contains a detailed provision on the subject. Financial undertakings must be managed by directors who are fit and proper persons. Screening to determine whether directors and other persons responsible for the management of the pension fund are fit and proper persons is therefore carried out at the time of their appointment and whenever else may be necessary. More information on this can be found in the section on ‘Screening and assessments’.
The Report Format must be completed in full and sent by secure e-mail (firstname.lastname@example.org) to DNB.