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March 21, 2018

EBA published guidelines on the assessment of the suitability of members of the management body and key function holders. The guidelines set out appropriate supervisory practices in the European System of Financial Supervision and how Union law should be applied. The guidelines shall apply from June 30, 2018.

The competent authorities to which these guidelines apply should comply by incorporating the guidelines into their supervisory practices as appropriate, including where guidelines are directed primarily at institutions. The guidelines—which are in accordance with the Capital Requirements Directive or CRD IV (Directive 2013/36/EU) and the second Markets in Financial Instruments Directive or MiFID II (Directive 2014/65/EU)—set out:

  • Requirements on the suitability of members of the management body of credit institutions, investment firms, financial holding companies, and mixed financial holding companies
  • Requirements about the suitability of the heads of internal control functions and the chief financial officer of credit institutions and certain investment firms, where they are not part of the management body, and, where identified on a risk-based approach by those institutions, of other key function holders, as part of the governance arrangements, and on the related assessment processes, governance policies and practices, including the principle of independence applicable to certain members of the management body in its supervisory function.
  • Template for a matrix to assess the collective competence of members of the management body (Annex 1)
  • Non-exhaustive list of relevant skills that institutions should consider using when performing their suitability assessments (Annex II)
  • Information and/or accompanying documents required to be submitted to the competent authorities for each requested suitability assessment (Annex III)

The competent authorities must notify EBA and ESMA about whether they comply, or intend to comply, with these guidelines, or otherwise with reasons for non-compliance, by May 21, 2018. In the absence of any notification by this deadline, the competent authority will be considered to be non-compliant by EBA and ESMA.

 

Related Link: EBA Guidelines (ZIP File)

Effective Date: June 30, 2018

Keywords: Europe, EU, Banking, Securities, Suitability Assessment, Guidelines, CRR, MiFID II, EBA

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