May 28, 2018

ECB updated its guide to fit and proper assessments in line with the Joint ESMA and EBA guidelines on suitability. The guide aims to describe and make public the supervisory policies, processes, and practices followed by ECB when conducting fit and proper assessments. The guide is updated regularly to reflect new developments and experience that is gained in practice.

With these policies, processes, and practices, ECB aims to ensure the maximum consistency allowed by the legal frameworks applicable within the Single Supervisory Mechanism (SSM). The guide covers fit and proper assessments of members of the management body, both in their management function (executives) and supervisory function (nonexecutives) of all institutions under the direct supervision of ECB (significant institutions or SIs), whether credit institutions or (mixed) financial holding companies, and in the case of licensing or qualifying holdings of less significant institutions (LSIs). The ECB guide does not replace the guidance provided by the Joint ESMA and EBA Guidelines on suitability or by the EBA guidelines on internal governance. The guide provides explanations on the processes conducted by ECB and specifies ECB’s main expectations when conducting sound and consistent suitability assessments.

Fit and proper supervision is one of the fields of competence for which ECB has exclusive responsibility. Article 4(1)(e) of the SSM Regulation makes clear that fit and proper assessments should be part of ECB’s supervision of the overall governance of credit institutions. However, this guide is not a legally binding document and cannot in any way substitute the relevant legal requirements stemming either from applicable EU law or applicable national law, nor does it introduce new rules or requirements. To the extent possible, the guide follows the terminology used in the CRD IV and the Joint ESMA and EBA Guidelines on suitability and the EBA Guidelines on internal governance.

 

Related Link: Guide to Fit and Proper Assessments (PDF)

Keywords: Europe, EU, Banking, Fit and Proper Assessments, SSM, Internal Governance, Suitability Assessment, ECB