The Bottom Line
- Full Accountability for Sales Channels: Companies using third-party intermediaries for sales are fully responsible for their conduct. A lack of direct involvement in the client interaction is not a valid defense.
- Due Diligence is Non-Negotiable: Failing to verify that intermediaries have the proper licenses and are following the law can result in 100% liability for any client losses, even if the client was also negligent.
- General Denials are Insufficient: In court, a generic denial of knowledge about an intermediary’s practices will not hold up. The court expects firms to have concrete control systems and evidence that they were followed.
The Details
This case concerns a long-running legal saga in the Netherlands involving “securities lease” products, where consumers were sold investments funded by a loan from the same provider, Dexia. In this instance, the consumer purchased the product through an intermediary, Pensioen Partners. When the investment resulted in a loss, the consumer sued Dexia, arguing that the intermediary provided personalized financial advice without the required legal license, making Dexia’s acceptance of the client unlawful.
The Gelderland District Court sided entirely with the consumer. The key to the ruling was the intermediary’s actions. The consumer provided a detailed account of how the advisor visited their home, discussed their personal financial situation and goals (including a future home renovation), and then recommended a specific Dexia product as being “suitable” and “the most secure form of investing.” The court determined this was not a simple sales pitch but a personalized recommendation, which constitutes financial advice—an activity for which the intermediary was not licensed.
Crucially, the court held Dexia responsible for this violation. Dexia argued it had no knowledge of the specific advice given. However, the court dismissed this, stating that Dexia should have known that its intermediaries were widely giving such advice. As a regulated financial institution, Dexia had a duty to implement controls to ensure it did not accept clients who had been onboarded through unlicensed advice. By failing to perform this due diligence on its sales channel, Dexia breached its duty of care. Citing established Dutch Supreme Court precedent, the court found Dexia’s failure so severe that a “fairness correction” was applied, placing 100% of the liability for the consumer’s losses squarely on Dexia.
Source
Rechtbank Gelderland
