This morning, G-REG in collaboration with ANZSOG and VUW hosted a workshop on Intrusive Regulation and Cultural Change led by Prof Femke de Vries. Femke de Vries is a professor by special appointment in Supervision at the University of Groningen. She has worked in financial supervision for 15 years and was one of the architects of the re-designed financial supervision of DNB (the Dutch Central Bank and Prudential supervisor) after the financial crisis. Between 2015- 2018, Prof de Vries was a member of the Executive Board of the Authority for Financial Markets, the regulator of business conduct in the Netherlands.
In the workshop (here is a summary), Prof de Vries explained how the Netherlands has reshaped its regulatory system, after the global financial crisis, and was influenced by a landmark International Monetary Fund report into financial regulation in the wake of the GFC which recommended five criteria for regulatory supervision: intrusive, sceptical, proactive, adaptive and conclusive. The workshop was attended by representatives from a range of New Zealand agencies, including the Treasury, FMA, DIA and MBIE. There are many take-home lessons from Prof de Vries’ presentation and given the ongoing note taking, and the many and questions asked I am convinced it resonated very well with the needs of the participants.
For myself, it was of interest to see how insights from the behavioural sciences (discussed in earlier blog posts) were central to some of the solutions chosen in the Netherlands, and how the focus of solutions to systemic regulatory problems has partially moved away from structural adjustments to addressing questions of agency. Many of the solutions suggested to make the Dutch financial regulatory system more forwards looking were, in one way or the other, about individuals and collectives of people: (1) the suggested ‘fit and proper person test’ to ensure the right people are hired for high-tier positions, (2) the focus on conduct and culture to deal with team practice and climate, and (3) the call for board effectiveness to lift organisational performance.
For those who were not able to make it today, many of the insights shared by Prof de Vries can be found a publication by the Dutch Central Bank, Supervision of Behaviour and Culture, and a publication by the Dutch Financial Market Authority, Learning from errors; towards an error management culture.
Thanks again to ANZOG for bringing Prof de Vries to New Zealand, and thanks to Femke and all workshop attendees for an excellent start of the week.