The Bottom Line
- Vetting Sales Partners is Non-Negotiable: Companies are directly liable for the unlawful actions of their third-party intermediaries if they “should have known” about their conduct. Claiming ignorance about a partner’s sales practices is not a valid defense.
- Full Liability Risk, No Customer Discount: A Dutch court has reaffirmed that a company’s failure can be deemed so severe—in this case, using an unlicensed advisor—that it must bear 100% of the customer’s losses, overriding any argument of shared client responsibility.
- “Industry Practice” Is a Risk, Not an Excuse: The court noted the “usual working method” of intermediaries was to give advice. This establishes a high bar for companies, implying they have a duty to investigate and cannot hide behind common (but illegal) industry practices.
The Details
In a recent ruling with significant implications for any business using third-party sales channels, the District Court of Noord-Holland has ordered financial services firm Dexia to fully compensate a customer for losses on a “securities lease” product. The case did not turn on the product’s risks, but on the actions of the intermediary who sold it. The court found that Dexia acted unlawfully by accepting a client introduced by an intermediary who provided personalized financial advice without the legally required license.
The court’s reasoning focused on the distinction between a simple introduction and a “personalized recommendation.” The claimant, a single mother with limited investment experience, was advised by the intermediary (“Belastingvrij Vermogensplan”) during a home visit. The intermediary discussed her specific financial situation and her goal of supplementing her pension, then recommended a specific Dexia product as being “suitable” for her. According to the court, this went far beyond a generic sales pitch and constituted regulated financial advice, for which the intermediary was not licensed.
Crucially, the court held Dexia 100% liable for all damages. The judgment states that Dexia “should have known” that its intermediaries were routinely providing this kind of advice. Because Dexia chose to use this sales channel to market its products, it had a proactive duty to ensure its partners were operating within the law. By failing to investigate and subsequently contracting with the client, Dexia committed an unlawful act. The court deemed this failure so serious that it required a “fairness correction,” placing the full financial responsibility on Dexia and dismissing any contributory negligence on the part of the client for entering into a risky agreement.
Source
Rechtbank Noord-Holland
