Brussels,
CIRCULARB 93/S To
21 October 1993.
CREDIT INSTI'NTIONS
TBE
Dear Hadam,
Dear Sir,
In its circular
defined, within
the prudential
of 28 July 1987, the Banking and Finance Commission has
the framework of the protection
of savings from the public
supervision,
appeal to independent
should be supervised.
Taking into
account
supervision,
This circular,
independent
credit
the experience
it
and adapted its
established
activities,
transactions
agents
the principles
institutions
and rules
subject
to its
1987 accordingly.
1987, shall
apply to all
in Belgium for the account of
in Belgium.
agent"
circular
“independent
agent”
shail
mean any person
but not under an employment contract,
is a*.:t!:;:rized to
as an independent,
in the name and for the account of a credit
transactions
which are part of the institution’s
current
through
direct
on behalf
contacts
of a credit
mandate, these self-employed
concerned.
may
of independent
of 28 July
or operating
1. The concept of "independent
carry out,
institution,
of 28 July
the circular
agents established
who, professionally
to re-examine
circular
institutions
1987, the Banking and Finance
agents of the credit
which replaces
For the purpose of this
gained since
necessary
to the independent
institutions
credit
agents and how such a network
Commission considered
applicable
under which conditions
with
the customers.
institution
independent
and
within
When Icarrying out
the limits
of their
agents commit the institution
2.
confines himself
Any person who, without having any power of representation,
to bringing
several parties together for specific
transactions,
shall not be
Credit institutions
appealing to such
considered an independent agent.
intermediaries
bringing
must see to it
the parties
together
power of representation
independent
in their
Article
status
agents.
they actually
and that,
as a result
confine
themselves
under no circumstances,
to
they have any
of which they would have to be considered
The intermediaries
concerned may only carry
on activities
own name.
With regard
legally
that
to the sale of savings
prohibited
certificates
to appeal to other
(“bans de caisse”),
intermediaries
it
is
than those referred
to in
3 of the Law of 4 December 1990, except when they act under the legal
of independent agent.
2. General principles
2.1. Representation
2.1.1.
For the banking activities
22 March 1993 on the legal
institutions,
institution,
principle
above-mentioned
activity
institution
Subject
granted
credit
enumerated in Article
status and supervision
3, 5 2L of the Law of
of credit
with
by that
must even be complied
with
if
an
is concerned which is not carried
on by the
itself.
to the specific
institution
institution
independent agents may only represent one single credit
except for activities
in the field of lending and leasing.
The exclusivity
credit
1.
of one single credit
measures which may be taken by a credit
regard
to organization
and supervision,
the mandate
to the activities
of the
institution
may, in addition
institution
itself,
subsidiaries
established
institutions
carrying
also include
the activities
in Belgium as credit
on activities
referred
Enclosed you will find the list of activities
3, 5 2 of the Law of 22 March 1993.
institutions
of its
or financial
to in the above-mentioned
enumerated in Article
3.
Article
3, 5 2. It goes without saying that
2.2.2.b)
must be applied when the subsidiary
stockbroking
firm.
2.1.2.
As far as credit
representing
2.1.1.
granting
the credit
may intervene
the capacity
independent
institution
either
of credit
agent,
is concerned,
the independent
for the activities
in the capacity
broker.
he shall
the second paragraph
concerned is a
exclusively
agent
referred
of independent
If he grants
credits
grant
of
to in
agent,
in the capacity
by the independent
the combination
of different
respected,
an independent
another credit institution.
2.1.3.
The independent
and indirectly
individuals
2.2.
2.2.1.
entities
and 3.4.)
acting
rule
principle
For
governing
are
agent of
both directly
by appealing
to private
as intermediaries.
rules
of the function
for one’s own account,
be prohibited.
combination
of independent
of independent
of the activities
This prohibition
of any activity
own account, including
Article
194, paragraph
2.2.2.
(cf 2.2.
agent must observe the exclusivity
or legal
The combination
activity
as the rules
agent may act as an independent
and may not evade that
Incompatibility
shall
agent and insofar
functions
of
those forms of credit
which are granted by the credit institution
which he represents.
types of credits which are not granted by the credit institution
represented
or in
involving
agent and the pursuit,
referred
shall
to in 2.1.1.
specifically
apply to the
exchange transactions
cash exchange transactions
above
for one’s
as referred
to in
2 of the Law of 4 December 1990, and the
agent.
a) The combination of the activity
of an independent agent of a credit
institution
and that of a stockbroking
firm, carried on for one’s
own account, shall
to the combination
with
stockbroking
subject
firm,
be prohibited.
the activity
This prohibition
of an authorized
to the provisions
of b).
shall
also apply
agent of a
4.
b) An independent
independent
institution
agent of a credit
institution
may act as an
agent of a stockbroking
firm, provided that the credit
concerned does not receive any stock exchange orders
itself.
The stockbroking
firm must undertake
exchange orders
agent acting
and received
through
that
any cash related
the intermediary
for his own account and combining
to stock
of an independent
his function
with
that
of an independent agent of a credit institution,
can only be received
in the capacity of independent agent of the credit institution
In that case, the credit institution
and the stockbroking
concerned.
firm must conclude
activities.
Such agreement shall
of the credit
activities
institution
ascertain
2.2.3.
that
their
define
agents acting
the responsibilities
firm with
for their
regard to the
account.
agents are able to deploy sufficient
with
institution
professional
clearly
of the
This
the credit institution
and the stockbroking
firm
procedures and safety measures on their independent
relationship
with their customers and that they
compliance
A credit
the supervision
and the stockbroking
of the independent
presupposes that
impose equivalent
agents for their
verify
an agreement organizing
those procedures
may allow
activities
its
means to
and measures.
independent
agents to carry
on other
than those for which it mandated them, insofar
as those activities
offered to delimit
are clearly
separated and sufficient
guarantees are
the risks resulting
from that situation.
The public
may under no circumstances get the impression that those other
activities
are carried
on for the account of the credit
institution.
Examples of activities
which may be combined and are considered
compatible with the legal status of independent agent, include the
intermediation
in insurances
consulting
insurance
services
services.
combining
such activities,
to verify
functions.
the strict
or real
estate
to undertakings,
social
When credit institutions
they must obtain
compliance
with
transactions,
tax
security
and mutual
appeal to agents
the agents’
authorisation
the imposed separation
of
The independent agent must observe the incompatibility
rules
directly
and indirectly
and may not evade the incompatibility
both
principle
by appealing
as
to private
individuals
or legal
entities
acting
intermediaries.
2.3. Information
The credit
the
customers
institutions
transactions
procedures
of
of their
must provide
independent
and information
maximum safety
agents through
with
regard to the
adequate supervision,
of the public.
The credit institutions
must see to the protection
of the depositors
by
avoiding that their legitimate
trust is abused by misleading constructions.
Consequently,
they must avoid that
may wrongly consider to be carried
services are provided which the customers
out under the credit institution’s
responsibility.
The independent
credit
institution
agent shall
with
carry
reference
on its
activities
as representative
to the name of the credit
of the
institution
which
he represents.
The independent
transactions
agent must fully
inform
which he is authorized
his customers
to carry
of the nature
out for the account
of the
of the credit
institution
as soon as they enter into a business relationship
with him as a
result of which they become regular customers.
On that occasion, the
customers shall be informed that all cash and securities
transactions
are
recorded on pre-printed
documents with the credit institution’s
letterhead,
copy of which must be given to the customer each time a transaction
concluded.
The information
to the customer
(unless
referred
the customer
to in this
instructs
paragraph
the credit
otherwise)
by the credit institution
itself
through
sent to the address indicated
by the customer.
shall
is
be confirmed
institution
correspondence
which is
a
6.
3. The ap;ent's contract
The co-operation
between the independent
shall
contract.
of the agent, contain
be based on a written
the independence
the safety
of the transactions
agent and the credit institution
This contract must, taking into account
the necessary
carried
principles
to guarantee
out for the account of the credit
institution.
3.1.
The contract
or an enclosure
the fields
of activity
the credit
institution
to the contract
must restrictively
define
and the types of transactions
for which the
The contract shall stipulate
that the
independent agent is competent.
agent is not authorized
to carry out any transactions
for the account of
for which he has not received
any written
instructions.
3.2.
The contract
principles
3.3.
shall
contain
referred
With regard
restricted
an exclusivity
clause
in accordance with
to in 2.1.
to credit
granting,
to collecting
the intervention
and verifying
of the agent must be
the required
information
and the
signatures
and transmitting
the documents to the credit institution.
interference
of the independent agent in credit granting decision
be excluded,
as he has no power of decision.
institution
validly
itself
binding
has taken a decision,
commitments on behalf
of that
However, without
agent shall be authorised,
(e.g. in the form of credit
a posteriori
amounts,
3.4.
confirmation
shall
inform
scoring)
procedure,
agent carries
the credit
out.
agent may make
institution,
offer
institution
and objective
to grant
as a result
and conclude
criteria
credits
of
the
on any other
beforehand
in writing.
institution
to an
institution.
professional
activity
subject
for limited
be set by the credit
shall clearly
stipulate
that, when that
principles
of this circular,
the credit
being carried
shall
prejudice
to these principles,
an independent
on the basis of standard examination rules
the maxima of which shall
If the independent
Any
Only when the credit
the independent
which he may only then communicate the credit
contract.
the
is contrary
activity,
he
The contract
to the
may oppose to it
7.
The contract
or the enclosure
which activities
clause
are authorized.
shall
mention
should the authorized
Non-compliance
that
prior
activities
with
this
mention
contractual
written
authorization
is required
be modified.
The contract shall contain the obligation
for the independent agent to
comply with the administrative
and accounting procedures prescribed
by
the credit institution.
They specifically
imply immediate registration
of each transaction,
credit
institution
and compliance
pursuant
regard to money laundering,
identification
3.6.
must explicitly
must be sanctioned.
The contract
3.5.
to the contract
especially
agent must undertake
in the promotion
constituting
to the legal
the rules
laid
and regulatory
with
down by the
provisions
with
regard to the formal
of the customers.
The independent
resulting
with
a special
not to use any methods aimed at or
of tax evasion
scheme referred
by third
parties
to in Article
and
57, § 3 of the Law
of 22 March 1993.
3.7.
The independent
securities
3.8.
agent must undertake
which he owes within
credit
institution
as well
credit
transactions.
to transmit
the periods
the amounts and
of time established
as the documents evidencing
The agent may under no circumstances
receive
by the
the financial
and
a mandate from a customer or
a power of attorney on the account of one of his customers, except for
family members living
under the same roof, nor take securities
or deposit
books of customers in open safe custody.
Exceptions
customers
obtained
to the prohibition
to take securities
in open safe custody,
the credit
the independent
institution’s
agent shall
management, excluding
all
or deposit
may only be authorized
approval.
be restricted
acts of disposal.
In that
after
books of
having
case, the role
to acts of mere safekeeping
The independent
of
and
agent must
8.
report
the number of securities
and the volumes concerned
to the credit
institution.
3.9.
The independent
agent may under no circumstances
accept a remuneration
from the customers.
3.10.
With regard
to his activities
independent
agent must undertake
circulars,
texts
carried
and advertising
on under such contract,
the
only to make use of the documents,
provided
for or approved by the credit
institution.
3.11.
The independent
regard
agent must accept that
of the credit
of the transactions.
requisite
institution
of functions
activities
authorised
The contract
must provide
shall
and external
the regularity
also concentrate
in case of combinations
pursuant
on the
with
to 2.2.3.
the possibility
put an immediate end to its relationship
without prejudice
to any indemnification,
4.1.
to the internal
in order to verify
The supervision
separation
compatible
4. Internal
books and documents with
to his mandate of agent are subject
supervision
3.12.
all
for the credit
institution
to
with the independent agent,
in conformity vith CommonLaw.
procedures
The credit
institution
shall
submit the activities
agents to adequate administrative
adequate
internal
of the independent
and accounting
procedures
vhich
enable
supervision.
These procedures
shall
- rules
down for each transaction
are laid
specifically
imply that:
and its
immediate accounting
registration;
- unless
procedures
transactions
are adopted which guarantee
are recorded
with
the credit
institution’s
that
the numbering
on pre-numbered
letterhead.
is not interrupted;
an equivalent
and pre-printed
safety,
all
documents
It must be regularly
checked
9.
- cash in hand shall
- rules
are laid
and training
to strrct
down for checking
as well
their
agents,
be subject
recruitment.
activity
is carried
the professional
as the financial
possible
of their
limits;
position
representatives
repute,
of the independent
and collaborators
With respect
experience
at the moment
to the independent
agents whose
on in the form of a company, not only the
experience and professional
repute of their managers, but also the
professional
repute and financial
soundness of the company shall be
checked:
- the credit
institution
sees to it
adequate professional
training
about the evolution
- the credit
shall
As such, for instance,
statements
of account
shall
instructs
be regularly
declaration
independent
they are regularly
it
direct
written
is advisable
to the address indicated
the credit
requested
agents get
informed
and transactions;
maintain
customer.
the customer
its
and that
of techniques
institution
that
contacts
institution
otherwise).
to approve the accounts
by means of a
by the customer.
4.2.
cell
at central
management level
of the acounts of the independent
sees to the regular
agents and the compliance
the procedures.
The credit
accounting
shortcomings
institution
shall occasionally
carry out administrative
on-site inspections
without prior warning, in particular
have been established.
out by the credit
credit
nor
of the
agent;
- a specialised
with
(unless
The customer
The statement may neither be sent by the credit institution
returned to the credit institution
through the intermediary
follow-up
the
to send regular
by the customer
which is sent to the address indicated
independent
with
institution
inspections
institution’s
shall
are entrusted
Such inspections
commercial
see to it
to other
that
inspection
and
when
may not be carried
department.
the administrative
The
and accounting
persons than those carrying
out the
10.
commercial inspections.
to oust the accounting
planning
shall
4.3.
This rule is meant to avoid commercial concerns
and administrative
aspects.
Both an inspection
and a programme for the inspections
by the internal
auditors
be established.
With regard
to credit
independent
agent of the credit
supervision
and the inspection
relationship
risks
granting
and when the representative
institution,
to credit
of the
must take account of the nature
between the credit
inherent
the nature
acts as
institution
granting
through
and its
of the
agent and of the
the intermediary
of independent
These risks relate to the quality
of the credit production,
on
agents.
the one hand, and to the responsibility
of the credit institution
in case
its
independent
particular
with
agent does not comply with
the existing
regard
on the other.
to consumer credit,
5. Managers and employees of credit institutions
similar to those of independent agents
If persons who are bound to the credit
carry
out functions
usual working
the principles
equivalent
carryinK
institutions
legislation,
in
on activities
by an employment contract,
to those of independent
hours in their own name, via a third party
of this circular
shall apply by analogy.
agents after
or through
their
a company,
However, for employees who are involved in the supervision
of the activities
concerned or who find themselves in a conflict
of interests,
the combination
-
of activities
shall
be unacceptable
and must therefore
be prohibited.
For managers not participating
in the daily management and for members of the
credit institution’s
Hanagement Committee, the combination of activities
shall
also be unacceptable.
6. Reporting
to the Banking and Finance ColRission
If a credit institution
puts an end to its contract with an independent
on the basis of a serious misdemeanour or the presumption of a serious
agent
misdemeanour,
delay.
it
must inform
the Banking and Finance Commission without
11.
7. Entry
into
This circular
circular
force
shall
entering
immediately
into
force,
adapted as soon as possible
Yours sincerely,
The Chairman,
J.-L.
Duplat.
Enclosure
: one.
enter
into
the existing
force.
Without
agreements shall,
and at the very latest
prejudice
if
to the
necessary,
on 30 June 1994.
be
___
12.
SNCMSURE
LIST OF THE ACTIVITIES ENDNERATED
IN ARTICLE 3, § 2 OF THE LAW OF 22
NARCH1993 ON THE LEGAL STATUSANDSUPEXVISIONOF CREDIT INSTITIJTIONS
1. Acceptance
of deposits
2. Lending,
including
3. Financial
leasing.
and other
repayable
funds from the public.
inter
alia consumer credit,
mortgage credit,
factoring
of commercial transactions
with or without recourse, and financing
(including
forfaiting).
4. Money transmission
services.
5. Issuing and administering
means of payment (e.g.
cheques and bankers’ drafts).
6. Guarantees
7. Trading
credit
cards,
travellers’
and commitments.
for own account or for account of customers
a) money market instruments
b) foreign
(cheques,
bills,
in:
CDs, etc.);
exchange;
c) financial
futures
and options;
d) exchange and interest
rate
e) transferable
securities.
8. Participation
in share issues
instruments;
and the provision
of services
related
to
such issues.
9. Advice to undertakings
related
purchase
questions
and advice
of undertakings.
10. Honey broking.
on capital
structure,
and services
industrial
relating
strategy
and
to mergers and the
--
13.
11. Portfolio
management.
12. Safekeeping
13. Credit
and administration
reference
14. Safe custody
services.
services.
of securities.