Starting this weekend, the Netherlands Authority for the Financial Markets (AFM) can impose fines of up to 8 million euros. The Dutch government hopes that increased penalties will act as a stronger deterrent for white-collar criminals.

The AFM supervises participants of all financial markets in the Netherlands, including financial service providers, stock brokers, bankers, insurance brokers, accountants and advisors. In the case of a violation of financial laws and regulations, the AFM is allowed to issue fines. Up till now, the maximum fine was 480,000 euros. From this Saturday, the AFM can issue a fine of 4 million euros for first time offenders and up to 8 million euros for repeat offenders. Additionally, managers and executives can now be personally fined.

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Maintaining adequate liquidity while stimulating economic growth can be a tricky business for banks.

This became apparent once again during a recent interview with Lucas Papademos, vice president of the European Central Bank (ECB), with the German business newspaper Handelsblatt.

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Have banks invested too little in common services, because the margins are too small? While the answer to that question might no longer be relevant, improvement of these services certainly is.

This is the conclusion of a recent Dutch study, commissioned by VODW Marketing, amongst some 5000 customers of 9 large Dutch banks.

The results: the quality of common daily services makes up 40% of the trust people put in a bank.

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Even private bankers, serving the High Net Worth Individuals (HNWIs), apparently need to open up their ears to their clientele.

This is one of the conclusions drawn in the 13th Annual World Wealth Report 2009, released by Capgemini and Merrill Lynch.

It turns out that in the past year, over 25% of the HNWIs withdrew their assets from their wealth management firm. Although most admitted this due to a loss of confidence or trust in their banker, it became apparent that a lot of them have seen their expectations remain unfulfilled. Clearly, even the most personal flavor of banking seems to have lost touch with their customer base.

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Should the European Union, under circumstances, be able to force member states to provide financial aid to banks that are at risk of bankruptcy? Or is this too big a violation of a nation’s sovereignty?

These were the stakes at a recent EU summit in Brussels, where cross-border financial regulation was the topic of discussion.

Warn and act
The proposal was to set up a European System of Financial Supervisors that monitors banking, insurance and securities involving two or more member states – in cooperation with national governments.

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Reduce the influence shareholders have on banks by 50% and instead appoint a council that keeps watch over the public interest.

This way, not only individual interests but also the greater common good is taken into consideration when a bank sets out a course for the future, say Prof. Michiel Scheltema and Arjan Scheltema.

Michiel Scheltema is former chairman of the Dutch ‘Wetenschappelijke Raad voor het Regeringsbeleid’ (Scientific Council for Government Policy) and together with his son Arjan Scheltema he wrote an advisory report for the ‘Vereniging voor Effectenrecht’ (Association for Securities Law) in which they plead the above measures.

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Governments should stop giving financial support to suffering banks. Let the banks topple over and let corporations find the money they need for investments elsewhere, for instance by issuing bonds. Banks can then focus on providing basic financial services, such as transaction services.

These are the views of Aaron Brown, US based fund manager and financial risk expert, according to a recent article in Dutch newspaper Het Financieele Dagblad.

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Column Evert Visser

People tend to hesitate before taking the leap to buy new products or use innovative services. Which is a pity since it causes innovative solutions to take a long time to fully bloom.

The same goes for the world of banking. Communicating with consumers and properly informing them is key.

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Offering complex loans is not done. Why? According to Ben Bernanke, chairman of the United States Federal Reserve, some banks deliberately made their credit products convoluted to increase profits.

Bernanke says that banks should strive towards the highest levels of consumer protection. However, innovation in the areas of consumer choice and access to credit continues to be important and shouldn’t be completely ignored. This because of the benefits innovative ideas can bring.

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Disruptivebanking.com visits the Albert Cuyp market in Amsterdam to see how market salesmen and the public in general feel about the credit crisis and what they think banks could do to regain their trust.

Please watch the movie below.

Another movie
In our first movie ULURU asked people in the P.C. Hooftstraat in Amsterdam what they think about banks and how they see the future. Click here to see this movie.