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Due to an increased need for liquidity and deteriorating market conditions for the majority of borrowers, banks have become increasingly focused on limiting their exposure to badly performing borrowers. As a result, the premature termination of facilities, usually initiated by banks as a last resort, has become a feature of discussions between banks and borrowers.
For the first time, a Dutch court has approved a refinancing structure by way of an enforcement sale that was pre-agreed by the pledgee, the pledgor and the buyer, although a junior creditor opposed the transaction. The structure confirms the opportunity for other international groups and their lenders to refinance senior debt and continue operations without junior debt.
Pursuant to Section 4.23(1) of the Financial Supervision Act, a mortgage adviser must inform himself or herself of the consumer's financial position, knowledge, experience, goals and willingness to accept risks, and any advice must be based on this information. In a recent case the Authority for the Financial Markets ruled that Postbank NV had failed properly to inform itself of consumers' financial situations.
It is established case law that a bank has a special duty of care towards private individuals. The scope of the duty of care is determined by the particular circumstances of the case, including the nature of the agreement between the bank and the borrower and the degree of expertise of the borrower. The Utrecht District Court recently provided further insight into the scope of the duty of care.
A recent Trade and Industry Appeals Tribunal decision confirms that it is almost impossible to raise funds from the public without a banking licence. Informal environments such as churches and sports clubs will rarely constitute the requisite 'restricted circle' between borrower and lender. The decision also confirms that there is no easy way to avoid orders for periodic penalty payments.
The legislation on the system of financial supervision has undergone a drastic change. The introduction of the Financial Supervision Act is the result of a major operation which constitutes the largest legislation reform in the Netherlands since World War II. This update provides a brief overview of the banking rules and the position of finance companies in the Netherlands.