Qualitative Stakeholder Research Management Summary

AFM Deepening Stakeholder Research Management Summary Qualitative Research M240625 Irene Zondervan Henk Heinen Karen Slootman

Management Summary 5 Sectors Pensions, Auditors, Asset Management, Capital Markets, Retail M240625 AFM Stakeholder Research - 5 Sectors 2

Motivaction AFM focuses on the right priorities but applies too little tailored work M240625 AFM Stakeholder Research - 5 Sectors 3

In Q3 2024, Motivaction spoke with 46 stakeholders. They represent 5 sectors under the supervision of the AFM. The research is an in-depth follow-up to the results of the quantitative research (Kantar October 2023) regarding the reputation of the AFM. The research aims to contribute to understanding the reputation and the effectiveness of supervision.

Shared Interests of Sectors and AFM Representatives of the 5 sectors share the interests of the AFM regarding the goals of supervision. They recognize and value the role of the AFM in protecting the integrity of the financial market, protecting consumers, and ensuring a level playing field. The sectors feel that supervision helps them safeguard their own reputation and that of their sector. It helps them reflect on their own assumptions and adjust them where necessary.

AFM focuses on the right priorities in light of trends The results do not support the outcome of the quantitative research that the AFM should set different priorities than it currently does regarding trends in the market and changing circumstances. The qualitative research instead shows that the sectors align with the AFM's focus regarding relevant market developments. The supervised institutions (OTSI) recognize themselves in the main trends that are ongoing and on which the AFM rightly supervises. Mentioned are DORA, Wtp, supervision of pension communication and guidance of the transition, crypto and algorithmic trading, digitalization, sustainability, internationalization, cyber security, level playing field, mergers and acquisitions. The results do support the finding that the AFM does not always apply the right focus in the manner of supervision, which means that, according to the sectors, enforcement is too heavy-handed and disproportionate. There is criticism of a too legalistic and theoretical approach where practice is insufficiently taken into account. There is criticism of a lack of tailored work, which is attributed to insufficient knowledge of specific market sectors or niche players within a sector.

Distance Determines Reputation The relationship, accessibility, and reachability are image-defining for the AFM. Supervised institutions that have their own account manager experience a completely different relationship with the AFM than institutions that have to manage without a fixed contact person. The former experience the possibility for consultation, dialogue, cooperation, and thereby more control over what the AFM expects of them. Open norms generate little or significantly less uncertainty for them regarding what is expected. They experience more equality in the relationship. Organizations and institutions without their own contact person and without experiencing accessibility and reachability, on the other hand, experience distance and thereby a certain degree of fear and uncertainty about what is expected of them. Open norms increase the uncertainty about doing things right, just as the lack of feedback on what has been submitted does. Their image of the AFM is more negative due to the lack of possibility to color this image themselves. The intention to work according to supervisory criteria is present. What is missing for them are clear guidelines and certainty, confirmation that they are working in the right way.

Motivaction Distance to the AFM is most decisive for reputation M240625 AFM Stakeholder Research - 5 Sectors 4

Distance Determines the Degree of Effectiveness of Supervision Lack of a contact person, difficulty in contacting an expert creates distance. Also, questionnaires that do not sufficiently align with their own practice have this effect, as do responses from employees that show a lack of the right sector knowledge. The feeling, the experience of not being seen and understood, stands in the way of experiencing effective supervision. The AFM is accused of lacking tailored work, which stands in the way of constructive cooperation. It hinders sufficient trust in the AFM and hinders trust in the effectiveness of supervision. The question that arises is: how can the AFM draw conclusions from answers to questionnaires that, in the eyes of the fillers, do not align with their practices? What is the value of these answers?

AFM is insufficiently aware of what is happening How can the AFM judge a sector over which, in their perception, there is insufficient knowledge among the supervisors? A lack of knowledge that, according to the supervised institutions, stems from a lack of contact with practice. Due to the lack of visibility into the effectiveness of this manner of supervision, having to meet all requirements sometimes feels unnecessary, excessive regulatory burden, and bureaucracy. This finding, regarding the experience of insufficient sector knowledge, aligns with the conclusion from the quantitative research that being better informed about what is happening in the financial sector in general and in the sub-sectors in particular, forms a challenge and opportunity for the AFM. This requires AFM employees who have acquired practical experience before joining the AFM or acquire it during their work. This requires more contact.

Making the Effectiveness and Costs More Transparent Making the effectiveness and costs of supervision more transparent is one of the opportunities for a better reputation for the AFM, according to the quantitative research. This research teaches that more insight here not only contributes to trust in the AFM regarding making the right choices in terms of time and money, but also in justifying the efforts that organizations must make to be compliant. An equally important, if not more important, goal for this target group. Compliance officers experience that they must answer internally within their own organization for their investments in time and money. The supervised organizations are therefore helped when the AFM provides more insight into the results and effects of its actions, because with this they can internally (within their own organization) provide proof of the legitimacy of their necessary investments to be compliant. The image of increasing regulatory burden, not only at the AFM but also with other supervisors with which the various sectors have to deal, stands in the way of experiencing effective supervision. More and better coordination of supervision is needed for this. Obstacles to the effectiveness of supervision include: • Personnel changes at the AFM • Operational inefficiency (long processing times, slow responses) • Lack of sector knowledge • Disproportionate enforcement on open norms • Guidelines that are not well aligned with practice.

Motivaction Get closer to the supervised institutions, individually and/or collectively M240625 AFM Stakeholder Research - 5 Sectors 5

One of the questions this research should answer is how parties wish to be involved, including through information and evaluation, and what this yields for them. Summarized, better reachability, both personal and digital, more clarity about expectations regarding what must be met beforehand, more knowledge of the relevant players, more principle-based approach, a friendlier tone, as well as more speed and consistency are important parts of the manner in which they wish to be involved. More mutual understanding and trust contribute, in the perception of the OTSIs, to more effective supervision. This contributes to the shared goals and interests of the financial market and the AFM.

Challenges and Opportunities for the AFM: Empathize More with Organizations The main challenge is: respond to the need from the sectors to stand closer to the institution or organization you supervise. Meet the need of organizations to feel seen and recognized. Recommendations to give shape to this are: • Adapt questionnaires better to the relevant sector and player. Show that you treat a niche player with a specific product or market differently than a generic provider. Recognize that the target group of one provider consists of consumers, but that of the other consists of the professional B2B market. • Seek connection to exchange information and show that you are open to learning from the sectors, to delve into their products and markets. Organize webinars, invest in the education and training of new employees. • Organize round tables and events to help organizations benchmark and understand the focus areas of the AFM. And to keep them informed of new developments. • Ask questions, listen, show empathy, put yourself in their standpoint. From there, indicate what, why not. Avoid an admonishing tone, be friendlier. • Work on reciprocity and ensure timely follow-up on inquiries. Give a response, feedback. • Support organizations where possible. Work on a clear, user-friendly website and well-functioning portals. • Best practices, saying what is possible and what is not, help. Share these where possible. • Help where possible to reduce uncertainty. This lies in the tone of voice. Be vigilant against projecting distrust, giving the organization the idea that you assume the worst. • Be proactive in your communication: indicate in good time what institutions can expect. Share an agenda so they can take this into account in their planning. If there are changes in forms, make this known in good time.

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