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Duty of Care

The essential role of Duty of Care in financial services, how it ensures consumer protection, and why it's a cornerstone of financial trust and integrity.

The Imperative of Duty of Care for Financial Service Providers

Since January 2014, the concept of Duty of Care (Zorgplicht) has been an integral part of the Dutch financial landscape, enshrined in article 4:24a of the Financial Supervision Act (Wft). This legal framework mandates that financial service providers act in the best interest of their clients, offering an additional layer of protection during the acquisition of financial products and services.

Why Duty of Care Matters in Financial Decisions

Financial decisions carry substantial weight, potentially altering an individual's living situation significantly. Customers often face challenges in gathering necessary information, foreseeing the implications of financial decisions, and appraising associated risks. Duty of Care ensures customers are well-informed and shielded when engaging with financial products and services.

The Scope and Obligations of Duty of Care

Applicable to financial entities like banks, insurers, investment firms, intermediaries, and financial advisors, Duty of Care mandates these institutions to conduct themselves with the diligence expected of competent professionals. Paramount to this is prioritizing the client's interest and aligning services with the client's circumstances.

There isn't a one-size-fits-all Duty of Care. It comprises regulatory obligations under Part 4 of the Wft, including specific duties (know your client, information obligations, cost transparency, etc.) and general requirements. There's also a civil Duty of Care stemming from the Dutch Civil Code regarding proper contracting, general banking conditions, and a special duty of care developed through jurisprudence, which centralizes the need for careful behavior towards clients.

Dual Nature of Duty of Care

The regulatory and civil aspects of Duty of Care are complementary. For instance, Wft's behavioral rules often help define the special duty of care, which can extend beyond the regulatory requirements to offer broader customer protection.

Fulfilling the Duty of Care

Specific obligations under the Duty of Care include:

  • Providing sufficient pre-contractual information for informed decision-making.
  • Conducting thorough client research to understand their financial status and objectives (KYC rules).
  • Warning clients about associated risks with services or products.
  • Offering suitable advice based on comprehensive client information.
  • Conducting knowledge assessments to ensure client understanding of risks.
  • A generic provision enabling regulatory action for any Duty of Care breaches.

Supervision and Enforcement by AFM

The Authority for the Financial Markets (AFM) oversees the adherence to the Duty of Care. If providers fail to comply, resulting in issues that could harm financial market trust, the AFM may take enforcement actions.


1. What is the Duty of Care in financial services?

The Duty of Care is a legal obligation for financial service providers to act in the best interests of their clients, ensuring that they are protected and informed when using financial products and services.

2. Who is subject to the Duty of Care?

All financial enterprises, including banks, insurers, investment firms, intermediaries, and financial advisors, are subject to the Duty of Care.

3. What does the Duty of Care entail?

It includes obligations like providing adequate information, conducting thorough client research (KYC), warning clients of risks, and providing suitable advice based on the client’s profile.

4. How does the AFM enforce the Duty of Care?

The AFM monitors financial service providers for compliance and can take action against those who do not fulfill their Duty of Care, including issuing penalties or other disciplinary measures.

5. What should a financial service provider do to comply with the Duty of Care? Providers should have robust processes for client assessment, risk warning, and advice provision. They should also maintain clear records to demonstrate compliance with the Duty of Care.