What is a Fitness & Propriety Test?
The FCA make it mandatory for certain firms to assessing and verify the fitness and propriety of any employee who is (or will be) carryng out a Controlled Function; Senior Management Function; and/or a Certification Function. This requirement ensures that roles posing a significant impact or risk to customers; market integrity; and/or the business, are filled by personnel who are qualified, competent and capable of performing such a role.
The assessment criteria for the FIT requirements have been set out in the FCA’s FIT handbook module and also come under the scope of the Senior Managers & Certification Regime (SMCR).
The implementation of the SMCR rules also brought into force that firms and their employees are accountable for performing their roles effectively and accurately.
Senior Managers & Certification Regime (SMCR)
The Senior Managers and Certification Regime (SM&CR) applies to all FCA regulated firms. These firms also have obligations under COCON for compliance with the conduct rules. The three main elements of the regime are the: –
- Senior Managers Regime
- Certification Regime
- Conduct Rules.
The FCA state that the “SMCR aims to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence”.
FIT Assessment Template
Know Your Compliance Limited have developed an exclusive range of SMCR Policy Templates, which includes a form for completing FIT assessments. With a pre-formatted style and suggested content, firms can assess, record and evidence their compliance with the SMCR Fitness & Propriety rules.
An organisation may only grant an approved status or certification where it has satisfied itself that the individual being assessed is fit to perform the relevant function. There are a number of requirements under the test criteria, which include: –
- The individuals: –
- honesty, integrity and reputation
- competence and capability
- financial soundness
- training and expertise
- competence to perform the function
- personal characteristics to perform the function