The requirement to apply a PARP also applies to licensed alternative investment fund managers (beheerders) who offer interests in alternative investment funds (beleggingsinstellingen) and UCITS to “retail investors”.

An important part of the PARP are the scenario analyses. Parties are required to use scenario analyses to examine the operation of a financial product in various circumstances (scenarios). This process gives them visibility on the operation of the product and enables them to check whether it continues to fulfil the target market's objectives in the specific circumstances. Based on the outcomes of scenario analyses, the (co-)developer can adjust the financial product, target group and/or distribution strategy.

From its research, the AFM has noted that (co-)developers have difficulty, for example, in designing the scenario analyses and using the results of the analyses in the balanced weighing of interests that is required as part of the PARP. The AFM also noted that firms often conduct scenario analyses from the firm's perspective and examine the impact on the product’s target market (the customer perspective) to a lesser extent.

With the Guideline, the AFM aims to provide tools that (co-)developers can use to improve their scenario analyses. Therefore, the AFM provides a step-by-step plan for conducting thorough scenario analyses and answers the following questions:

  • Why are scenario analyses important?
  • How can a firm carry out scenario analyses?
  • What do scenario analyses provide?

Additionally, the Guideline contains examples of scenario analyses for various product groups.

Next steps

Parties are recommended to evaluate whether their current PARP, and more specifically the scenario analyses included in it, are compliant with the new guidance from the AFM.

Developing and maintaining a compliant PARP can be challenging. Our team of experts is here to assist you in reviewing your current PARP and updating it where necessary to ensure alignment with the AFM’s Guideline. Contact us to learn more about how we can help you stay compliant.