Dutch watchdog dismisses notion of self-regulation for pension funds

Experience has shown that self-regulation does not work in the pensions sector, the Dutch regulator has argued.

Speaking at the See You in Court conference organised by IPE sister publication IPNederland, Ron Luberti, director of legal affairs and general counsel at De Nederlandsche Bank (DNB), said the sector needed an external supervisor that sat “just beside the driver’s seat”.

Responding to a question from the audience, Luberti said: “The supervisors DNB and AFM, as well as the minister of Social Affairs, have left policy on some aspects to the sector. You notice that it doesn’t work in particular where it hurts, as with remuneration policy.

“This is not to blame the sector. The interests are contradictory and complicated – you can’t force the sector to solve it. It is up to the legislator to put a check on it.”

It is for this reason, he said, that self-regulation is the wrong approach.

“But I believe,” he added, “that a proper dialogue is essential for proper supervision, with the sector indicating what it would have done had it been the supervisor.”

Luberti also responded to the question of whether the supervisor was guilty at times of taking over the responsibility of a pension fund’s board.

“The problem is that pension funds, much more than banks and insurers, need to deal with open norms, such as the prudent person principle and balancing various interests,” he said.

Referring to the case of glass manufacturer scheme PVG – which was ordered by the DNB to offload most of its gold holdings – he added: “What do you do if a pension fund has disproportionally invested in gold?”

In Luberti’s opinion, there is nothing wrong with the increasing trend of the supervisor putting itself in the position of a pension fund’s board.

“Proper supervision doesn’t require that you take over the driver’s seat, but sit right next to him,” he said.

The fact this sometimes leads to court cases is “part of the game” – the DNB is “not afraid to enter into combat”.

But the DNB’s director of legal affairs also acknowledged the sector’s need for more clarity in advance about what was allowed and what was not.

He said it was almost impossible to express an opinion that was still valid two years later, as developments in the financial world came too quickly.