Fit & Proper Certification of Management Body & Key Function Holders
Certificate of Individual Fit & Proper Suitability in Financial Institutions
Table of contents:
Focus of the advisory service
On the subject of Fit & Proper
Fit & Proper Regulations [EBA/GL/2021/06, ESMA35-36-2319, EBA/GL/2022/03, EBA/GL/2022/09; Fit & Proper Circulars from NCAs] set high standards concerning legal Fit & Proper requirements for the suitability of the Management Body (MB) & Key Function Holders (KFHs) in significant and less significant financial institutions. During the appointment process and in all business operations, the Fit & Proper suitability of MB & KFHs must be proven and adequately documented, ready for a report to National Competent Authorities (NCAs) in a timely manner. Therefore, financial institutions have to ensure adequate Fit & Proper qualifications for MB & KFHs including qualified external evaluations of current Fit & Proper know how. Simple participations in seminars without colloquium/exam are no longer accepted as proof of regulatory compliant Fit & Proper know how. According to SREP, supervisory authorities have to evaluate in on-site inspections (OSIs) the Fit & Proper implementation for MB & KFHs as part of the governance check. If a member of the management body or a key function holder is not Fit & Proper, competent authorities have the power to remove such a person from that position.
Fit & Proper Staff: Managing Directors, Members of Supervisory Boards, CFO, Heads of Internal Control Functions, Risk Management, Compliance, Internal Audit, Heads of Significant Business Lines (Retail, Wholesale, Real Estate, Asset Management, Treasury)
Fit & Proper Process
To comply with legal Fit & Proper requirements taking into account the principle of proportionality, we have developed a Fit & Proper Process to ensure institution- and person-specific Fit & Proper suitability for all members of the Management Body and all Key Function Holders.
Based on the regulatory Fit & Proper knowledge areas, management bodies and key function holders receive a comprehensive overview of the latest Fit & Proper changes on a monthly basis.
In addition, we offer "Fit & Proper Regulatory TV" as quarterly event to present the latest Fit & Proper updates. During these ONLINE sessions, our regulatory experts explain current developments in the financial sector as well as key topics of regulatory changes including e.g. ESG issues.
To ensure and to prove Individual Fit & Proper Suitability, participants pass a Fit & Proper Quiz (online exam: multiple-choice questions) every three months. Subsequently, all participants (with a pass) receive a personal Certificate of Individual Fit & Proper Suitability.
To ensure and to prove Collective Fit & Proper Suitability, financial institutions can let all MB & KFHs participate in individual certifications to get a Certificate of Collective Fit & Proper Suitability.
Fit & Proper Results to Comply with Regulatory Fit & Proper requirements
- Fit & Proper Governance Process for Individual & Collective Fit & Proper Know How Suitability
- Regular Updates of Fit & Proper Knowledge/Presentations/Know How Evaluation Questions
- Fit & Proper Certificates as Regulatory Documentation of Individual & Collective Suitability
In parallel with the ever-increasing competition in the financial sector and the associated risks, the rule sets of regulatory and supervisory authorities are becoming more and more challenging. In their daily busy schedule senior executives, key position holders sometimes may overlook important regulations or fail to grasp their importance and possible impact on the business. FCH, through its Fit & Proper training, not only keeps me up to date on all legal and administrative regulations that directly affect the financial sector both nationally and across Europe, but also provides uninterrupted guidance and support in the implementation of those complex rule sets. Not only for my personal competence and professional career, but also for institutional sustainable development, FCH is definitely the right partner.
Ş. Çağrı Gülşen
Deputy General Manager
Ziraat Bank International AG
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