The Dutch government needs to go further to improve the quality of trustee boards, regulator De Nederlandsche Bank (DNB) said in a letter to the Ministry of Social Affairs.

Internal supervision in particular needs to be improved, DNB believes, as it notes the board of supervision, which is to be established, will have insufficient strength to ensure the trustee board feels the consequences of bad management.

Ideas for reinforcement of the internal supervision are a notification duty at DNB if a board does not respond to a warning by the internal supervisor in a timely fashion. Also, where, important decisions are not first approved by the board of supervision, it should get the authority to suspend or dismiss trustees.

The regulator said trustee boards get more complex due to the instability of the financial markets, but also the growing conflict of interest between different generations. Therefore the government needs to hurry with implementing the draft legislation.

The government hopes to professionalise trustee boards by demanding more expertise of trustees, while independent external experts need to be appointed to the board or the board of supervision.

However, at the moment the government is waiting to implement the draft legislation as it is waiting for a final agreement with the social partners on the new pension agreement. But DNB said this might not happen in the short term and the government should therefore continue working on the draft legislation.

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