Senior Management Functions (SMFs) and Certification Staff need to be fit and proper for their roles. See how our Fitness and Propriety (F&P) requirements apply to your firm.
Detailed explanation of the F&P requirements is contained in the Fit and Proper test for Employees and Senior Personnel (FIT)[1] part of FCA Handbook. The main elements to be considered when assessing F&P are:
- Honesty, integrity, and reputation
- Competence and capability
- Financial soundness
Firms should demonstrate that they are making regular, thorough and consistent assessments of the F&P of SMFs and Certification Staff. In addition to the information in FIT, the following examples set out our expectations of firms when they assess F&P.
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Fitness and propriety |
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|---|---|
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Positive indicators |
Negative indicators |
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F&P checks identify new issues with staff – some fail. |
F&P checks identify nothing new; a ‘rubber stamp’ exercise. |
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Relevant SMFs actively oversee the F&P process and ensure appropriate reporting. |
Relevant SMFs have delegated the F&P process and cannot demonstrate adequate oversight and reporting. |
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Competence assessment demonstrates that thought has been given to each specific role (including managers). |
Competence assessment is perfunctory and/or cannot be evidenced as being objective. |
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Development plans are put in place as a result of F&P assessments. |
No development needs are identified. |
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Managers are adequately trained in the firm’s approach to F&P and understand what is expected of them. |
Managers are poorly trained and/or have inadequate guidance as to what is expected of them in terms of F&P. |
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A detailed F&P process has been introduced and integrated into existing HR/performance management processes (it covers what happens if someone fails F&P). |
F&P is considered (without review) to already be covered by pre-existing HR/performance management processes and/or there is no process for dealing with someone who fails F&P. |
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F&P panels – which include senior managers - are convened to consider marginal cases. |
Process for considering marginal F&P cases either does not exist or is rarely convened. |
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Firm has appropriate criteria and a robust process for identifying certification staff on an ongoing basis. |
Identification of certification population is ad hoc and/or a burdensome manual process. |
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Regulatory references disclose misconduct/relevant concerns and are produced in a timely manner. |
Regulatory references fail to provide the necessary information and/or are not available promptly. |
Small firms may need to interpret some of these indicators in a proportionate way, but they should still give thought to the intention of the indicators, and this should not reduce the effectiveness of their F&P assessments or the Certification Regime. For more information, read section 9 of the SM&CR Guide for solo-regulated firms[2] (PDF).
F&P assessments are only required for individuals who meet the criteria for one or more of the Certification Functions or who are SMFs. However, if firms want to extend similar F&P assessments to individuals who are outside the Certification Regime on a voluntary basis, they can do so.
