FINANCIAL SERVICES AND MARKETS AUTHORITY

PREFACE

I would like to introduce the Financial Services and Markets

Authority (FSMA) to you. The FSMA, along with the National

Bank of Belgium (NBB), is entrusted with the supervision of the

Belgian financial sector.

The Belgian Parliament has conferred several powers on the

FSMA enabling it to undertake actions with a view to promoting

consumer protection and the integrity of the financial markets.

This brochure sets out what the FSMA stands for, what it does

and how it carries out its tasks.

Jean-Paul Servais,

Chairman

MISSION

As a supervisory authority, the FSMA strives to ensure the honest and equitable treatment of financial consumers. It aims at the fair and orderly operation and the transparency of the financial markets by seeing to it that companies that raise financing on those markets provide correct and complete information. It promotes proper provi-sion of financial services by verifying that finan-cial institutions comply with the applicable rules of conduct, by supervising financial products, financial service providers and supplementary pensions, and by contributing to improving the financial education of consumers. In this way, the FSMA seeks to ensure that the financial system deserves the trust of its users.

WHAT IS THE FSMA?

The FSMA was established on 1 April 2011; its full official name is the ‘Financial Services and Markets Authority’.The FSMA’s status is that of an autonomous public institution. This means that it was established by law and that it carries out independently the tasks in the general interest entrusted to it by Parliament. The members of the FSMA’s governing bodies are appointed by Royal Decree for a period of six years. The FSMA staff have the status of (private sector) employees.The FSMA, alongside the National Bank of Belgium (NBB), super-vises the Belgian financial sector. The FSMA’s competences fall within the following six domains: surveillance of the financial markets and supervision of the financial information dissemi-nated by companies, supervision of compliance with conduct of business rules, product supervision, supervision of financial service providers and intermediaries, supervision of supplemen-tary pensions, and contribution to improving financial education.These competences are set out in greater detail below.

WHAT ARE THE FSMA’S TASKS?The FSMA has six principal tasks.

SURVEILLANCE OF FINANCIAL MARKETS AND SUPERVISION OF COMPANY INFORMATION

The FSMA is responsible for the surveillance of the financial markets and for supervising the financial information dissemi-nated by companies. This means principally that it verifies that the information disseminated by listed companies is complete, gives a faithful image of the company and is made available in a timely manner. In addition, the FSMA ensures that all share-holders of a listed company are treated equally. Moreover, it supervises the information disclosed by unlisted companies if the latter issue securities to the public. Finally, the FSMA sees to the smooth functioning of the financial markets while also supervising market infrastructures such as Euronext Brussels.

Specifically:

• The FSMA ensures that financial information disclosed by listed companies is available to everyone at the same time.

• In the case of a takeover bid, the FSMA verifies compliance with the rules that guarantee equal treatment of all sharehold-ers are complied with.

• Where a company offers securities to the public in Belgium, the FSMA gives prior approval to the prospectus and related advertisements, or determines whether the prospectus has been approved in another country.

• The FSMA can intervene in various ways if a company fails to comply with the rules (e.g. by publishing a warning, suspend-ing the listing of a share, imposing a fine, etc.).

• The FSMA can investigate possible cases of insider dealing or market manipulation, and may impose sanctions.

PRODUCT SUPERVISION

Supervision of financial products is intended to ensure that the products offered to consumers are comprehensible, useful, present an acceptable level of risk for investors and comply with the relevant laws and regulations. It should also ensure that con-sumers have a clear overview of the costs associated with the products. The FSMA takes initiatives to make financial products simpler and more comprehensible.Product supervision is exercised in two ways: by supervising the quality of the information and advertising material concerning the financial products offered, and by supervising compliance with the regulations governing the products themselves.

Specifically:

• The FSMA has launched a moratorium on the distribution ofparticularly complex structured products to retail clients inBelgium. The moratorium is one of the initiatives taken by theFSMA to simplify financial products and render them moreunderstandable.

• The FSMA approves advertising materials and info sheetsrelating to regulated savings accounts and other savings andinvestment products.

• The FSMA has imposed a ban on distributing several catego-ries of financial products based on non-mainstream assets toretail clients in Belgium. This ban applies, among other things,to traded life policies (life settlements) and derivative productsbased on a virtual currency.

• The FSMA has launched a risk label which assigns savingsand investment products to one of five possible risk classes.The label is included on advertisements for products that aredistributed to retail clients in Belgium.

RULES OF CONDUCT

The FSMA sees to it that financial institutions comply with the rules of conduct. These rules are intended to ensure that the institutions treat their clients fairly, equitably and professionally. The rules apply to all financial institutions that offer products in Belgium, including banks, insurance companies, insurance intermediaries and investment firms.Financial institutions must have an appropriate organization and the requisite procedures in place to be able to guarantee that consumers of financial services and products are treated with due care and attention. This means, among other things, the provision of correct information, an appropriate manage-ment of potential conflicts of interest and best execution of clients’ instructions. In addition, financial institutions may only sell those products that fit the clients’ risk profile.

Specifically:

• The FSMA ensures that clients do not fall victim to practices whereby a financial institution sells them a product that does not fit their risk profile or investment goals.

• The FSMA sees to it that the interests of a financial institution do not prevail over those of its clients.

• The FSMA’s central inspection team carries out on-site inspec-tions to ensure that the rules of conduct are complied with. If any breaches, weaknesses or omissions are observed in the course of an inspection, the FSMA ensures that those obser-vations are adequately addressed.

FINANCIAL SERVICE PROVIDERS AND INTERMEDIARIES

The FSMA is responsible for supervising a wide range of finan-cial service providers. These include:• intermediaries in banking and investment services as well as

insurance and reinsurance intermediaries (agents and brokers);• mortgage and consumer credit providers and intermediaries

in mortgage and consumer credit1; • management companies of undertakings for collective invest-

ment;• portfolio management and investment advice companies;• currency exchange offices (bureaux de change);• financial planners.

1 As from 1 July 2015

Specifically:

• All intermediaries must be registered with the FSMA before they may begin to carry out their activities. The register published by the FSMA on its website lists all registered intermediaries.

• If someone wishes to become an agent or broker in order to sell banking or insurance products, the FSMA checks whether that person has sufficient training and is fit and proper for this activity.

• Management companies of undertakings for collective invest-ment and portfolio management and investment advice com-panies must hold an authorization from the FSMA.

• If the FSMA determines that someone is offering financial ser-vices without the requisite authorization, it publishes a warning to this effect and brings it to the attention of the judicial authorities.

• The FSMA monitors on an ongoing basis whether an authorized institution fulfils the authorization and business operation requirements provided for by law.

FINANCIAL EDUCATION

The FSMA has been tasked with contributing to the financial education of savers and investors. Improved financial knowledge on the part of consumers can help restore their confidence in the financial system. The FSMA has set up a special service responsible for this task and has prepared and implemented an action plan to this end.

Specifically:

The financial education programme is structured around three components:• The www.wikifin.be website: a portal, continuously being

devel oped, the aim of which is to provide neutral, reliable and practical information about various topics to do with money. The site also provides quizzes and tools for use by consumers, such as the savings account simulator. Information campaigns are regularly conducted with a view to making the site more widely known.

• Teaching: in collaboration with the competent authorities in the relevant areas, the FSMA helps support schools in offering financial education by providing pedagogical materials for use by students and teachers.

• Sharing good practices: the FSMA seeks to develop collabora-tion among the different Belgian and international actors that have an interest in financial education.

PENSIONS

The FSMA is responsible for supervising supplementary pen-sions that employees and the self-employed build up through their professional activities (known as ‘second-pillar pensions’). The FSMA supervises compliance with the social legislation relating to second-pillar pensions, and also oversees the finan-cial health of institutions for occupational retirement provision, which manage supplementary pension plans.

Specifically:

• The FSMA handles complaints from members and benefi-ciaries relating to their supplementary pension rights.

• If an institution for occupational retirement provision experi-ences a shortfall, the FSMA can require it to develop a recovery or consolidation plan in order to ensure that the shortfall is made up as soon as possible.

WHAT TYPES OF ACTION DOES THE FSMA TAKE?The FSMA can take a wide range of possible actions in the course of carrying out its supervisory tasks. An overview:

Contact point, information provision and dialogueThe FSMA is a contact point where financial consumers as well as companies, institutions and persons under its supervision can turn for information and explanations of the rules in force.

Circulars, communications, recommendations and mora-toriaThese are instruments which the FSMA can use to explain and interpret legislation. They enable the FSMA to indicate how it will apply the rules, so that the actors concerned know precisely how to implement the legislation.

Corrective measuresThe FSMA can impose a variety of corrective measures. For instance, where the FSMA determines that some information is missing from a prospectus, it can require the undertaking or issuer to publish a correction. If that is not done, the FSMA itself may publish the additional information. It may also require changes to be made, if necessary, to advertising materials for various financial products.

InspectionsThe FSMA can ask the undertakings under its supervision to provide the necessary documentation and information, and can conduct on-site inspections in order to verify compliance with all the rules. It can also conduct anonymous inspections regard-ing certain matters (mystery shopping).

WarningsFinancial service providers who wish to offer their services in

Belgium must first register with or receive authorization from the competent supervisory authority. If a financial service pro-vider offers services without such registration or authorization, the FSMA publishes a warning to advise the public. This infor-mation is also reported to the judicial authorities.

SuspensionThe FSMA ensures that price-sensitive information concerning listed companies is available to everyone at the same time. If this is not the case, then the FSMA may decide to suspend trading in the shares until the information has been made available to everyone.

Administrative measuresIf the FSMA determines that a financial service provider no longer fulfils the conditions for registration or authorization, it may take administrative measures. The most severe measure is striking the intermediary from the register or revoking its authorization. If that happens, it may no longer carry out its activities.

Administrative sanctions (fines and penalties)The FSMA may impose fines or penalties for infringements of financial legislation. It is not only actors in the financial sector that fail to keep the rules that may be sanctioned. Companies or individuals who, for example, infringe the rules on market abuse may also be required to pay a fine. There is a specific procedure to follow for imposing administrative fines. This procedure may also lead to an agreed settlement.

HOW IS THE FSMA ORGANIZED?

Management Committee (from left to right):Henk Becquaert, Member

Jean-Paul Servais, ChairmanAnnemie Rombouts, Deputy Chairman

Gregory Demal, Member

StatusThe members of the FSMA’s governing bodies are appointed by Royal Decree for a period of six years. The FSMA staff have the status of (private sector) employees.

Supervisory BoardThe Supervisory Board oversees the operations and financing of the FSMA. The Board also advises on priorities and on the implementation of the FSMA’s supervisory policy.

Chairman of the Management CommitteeThe Chairman of the Management Committee is the head of the FSMA. He represents the FSMA before third parties and before the law.

Management CommitteeThe Management Committee is responsible for the administration and management of the FSMA and determines its policy orien-tations. All decisions and measures necessary to carry out the FSMA’s supervisory mandate are taken in this body. All decisions of the Management Committee are collegial in nature. Each member of the Management Committee is responsible for over-seeing specific services, as indicated on the organization chart (see next page).

Sanctions CommitteeThe Sanctions Committee is an independent body that deter-mines the imposition of administrative sanctions. It consists of ten members: six magistrates and four others who may not be members of the FSMA’s staff or of its Management Committee.

Management Committee

General and legal studies, Organization, Communication, Financial education and International relations

Jean-Paul SERVAIS, Chairman

Policy, legal services

and international relations

External and internal

communication

Financial education

Strategy and Organization

Operational supervision of the markets and market operators

Annemie ROMBOUTS,

Deputy Chairman

Supervision of company information

and surveillance of financial markets

Supervision of market operators Human resources

Operational supervision of products and pensions

Henk BECQUAERT,

Member

Transversal supervision of financial products Supervision of pensions IT & Infrastructure

Operational supervision of intermediaries and conduct of business rules and Central inspection team

Gregory DEMAL, Member

Supervision of lenders and intermediaries

Supervision of conduct of business rules and

Central inspection team Management control

Investigations officer Enforcement Internal

auditor Internal audit

WHAT ARE THE FSMA’S VALUES?

Authority and decisivenessAs a supervisor, the FSMA must exude authority and decisiveness. It does so by carrying out its tasks efficiently, consistently and professionally. The FSMA acts decisively in order to enforce the rules.

Reliability and integrityIn order for its actions to be effective, the FSMA must itself fulfil its mandate with care and honesty. For this reason, the FSMA has a team of highly qualified specialists, and makes integrity and ethics the watchword for itself as well as its employees.

IndependenceThe FSMA is an autonomous public institution, and the members of its Management Committee are appointed by Royal Decree for a period of six years. The FSMA applies the existing rules independently, without outside influence.

Transparency and accountabilityWhile respecting its obligation of professional secrecy, the FSMA communicates as transparently as possible about its decisions and activities, and provides justification for them. It does so, among other things, by means of its annual report and its website.

Management Committee

General and legal studies, Organization, Communication, Financial education and International relations

Jean-Paul SERVAIS, Chairman

Policy, legal services

and international relations

External and internal

communication

Financial education

Strategy and Organization

Operational supervision of the markets and market operators

Annemie ROMBOUTS,

Deputy Chairman

Supervision of company information

and surveillance of financial markets

Supervision of market operators Human resources

Operational supervision of products and pensions

Henk BECQUAERT,

Member

Transversal supervision of financial products Supervision of pensions IT & Infrastructure

Operational supervision of intermediaries and conduct of business rules and Central inspection team

Gregory DEMAL, Member

Supervision of lenders and intermediaries

Supervision of conduct of business rules and

Central inspection team Management control

Investigations officer Enforcement Internal

auditor Internal audit

HOW DOES THE FSMA REPORT ON ITS ACTIVITIES?

The FSMA reports regularly on its activities and decisions. It does so by means of its annual report and also maintains a website that is regularly updated (www.fsma.be). The Chairman of the Management Committee or the Management Committee as a whole may be heard by the competent committees of the Chamber of Representatives and the Senate. Individual decisions taken by the FSMA may be appealed before the administrative or judicial courts, as applicable.

THE FSMA’S PLACE IN THE WORLD

The development of the European single market and the inter-nationalization of the financial markets means that financial regulations are increasingly set at European or international level. International cooperation and collaboration between supervi-sors have likewise gained in importance.

The FSMA is a member of the European Securities and Markets Authority (ESMA) and of the European Insurance and Occupational Pensions Authority (EIOPA). Each of these authorities contributes, in its own sector, to common supervi-sory standards and coherent supervisory practices. The FSMA is an active member of many working groups within ESMA and EIOPA tasked with preparing policy initiatives. This activity makes it possible to prepare Belgian supervision in a timely manner for new developments.

The FSMA also chairs ESMA’s Investor Protection and Inter me-dia ries Standing Committee (IPISC), which plays a key role in consumer protection.

The FSMA takes part in the work of the European Systemic Risk Board (ESRB), which is chaired by the president of the European Central Bank. The ESRB is responsible for analyzing all risks that could threaten the financial stability of the European Union.

In addition, the FSMA is represented on the international bod-ies that coordinate supervision at a global level, such as the International Organization of Securities Commissions (IOSCO) and the International Organization of Pension Supervisors (IOPS). The FSMA is member of the Executive Board of IOSCO and also chairs its Audit Committee and its European Regional Committee.

Finally, the FSMA has signed numerous bilateral and multilateral collaboration agreements with fellow supervisory authorities. The FSMA also sits on a number of supervisory colleges that coor-dinate the supervision of companies and market infrastructures.

If you have a complaint about a financial service, you can sub-mit it at no cost to the ombudsman for the sector in question. The FSMA itself handles complaints regarding supplementary pensions. The FSMA may also take note of complaints about other financial services, but it does not have the power to intervene in relations between individual clients and a financial institution. Mediation between a financial insti-tution and a client is handled by other specialized institutions. An overview of these institutions and their specific roles can be found on the FSMA website (www.fsma.be). Consumers of financial products can also contact the FSMA using the form provided for the purpose on its website.

WHERE CAN I MAKE A COMPLAINT?

HOW CAN I CONTACT THE FSMA?

Rue du Congrès / Congresstraat 12-14 1000 Brussels www.fsma.be

Contact information: Telephone: +32 (0)2 220 52 11 Fax: +32 (0)2 220 52 75 E-mail: info@fsma.be

Legal responsibility for this publication:

J.-P. Servais, Rue du Congrès / Congresstraat 12-14 - 1000 Brussels

Photography: Michel Wiegandt

Layout: Gramma nv, Antwerp

Printing: Goekint Graphics, Ostende

Disclaimer:

This document is intended to provide a concise and readable introduction to the work of the FSMA

and cannot be regarded as a legally binding publication.