Good supervision starts with good insight

For good supervision, identifying and understanding the key trends and risks in the financial sector in good time is essential. Only then can we apply ourselves to ensure fair and transparent financial markets and contribute to sustainable financial prosperity.

This 2020 Trend Monitor explains the key trends that affect the AFM’s approach to its supervision. For us, these are the ‘big five’: digitalisation, macroeconomic developments, changes in European and other regulation, political uncertainty and the transition to a sustainable economy and society. These trends form the basis for three supervisory themes and more in-depth analyses.

In the theme ‘vulnerabilities in household finances’, we assess the risks of interest-only mortgages. Many of these mortgages mature around 2035. For many people, this will coincide with their retirement and loss of their ability to deduct mortgage interest from income tax.

Now is the time to address this financial risk by taking appropriate action, such as accumulating capital of one’s own or looking for a solution with one’s mortgage provider.

In the theme ‘stable capital markets post-Brexit’, we look ahead to the IBOR transition. This will require an as smooth as possible introduction of new reference interest rates, with the least possible financial, legal and operational impact on the financial system. This is still a tall order.

Lastly, in the theme of digitalisation, we look at the risks of digitalisation in the provision of retail financial services. While this certainly presents opportunities, we have to ensure that the convenience it offers does not lead to new risks for consumers.

All the analyses in the 2020 Trend Monitor are included and developed in our multi-year strategy for 2020-2022 and our 2020 Agenda, which will be presented in January.

Hanzo van Beusekom

Acting Chair of the Executive Board of the AFM

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