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On 15 May 2017, the European Central Bank ("ECB") published a guide on fit and proper assessments (the "Fit and Proper Guide"), which reflects the result of a public consolidation launched by the ECB on 16 November 2016.
Since November 2014 the ECB is responsible for making decisions on the appointment of all members of the management bodies of significant credit institutions (the "supervised entities"). While the ECB guide to banking supervision published in 2014 only briefly addresses the suitability of members of management bodies of supervised entities, the recently published Fit and Proper Guide aims to provide a detailed description of policies, practices and processes applied by the ECB in assessing the suitability of board members and to improve transparency. It also aims to harmonise the application of assessment criteria applicable to fit and proper assessments in order to establish a common supervisory practice for assessing the qualifications, skills and proper standing of a candidate for any such position.
The Fit and Proper Guide is not a legally binding document; it is intended to be a practical tool that will be updated regularly to reflect new developments and experience gained through practice.
Primary responsibility for selecting and nominating fit and proper board members, both at their initial appointment and on an ongoing basis, rests with the supervised entities. Supervised entities must notify the relevant national competent authority (the "NCA") of all board member appointments and must provide all information necessary for the fit and proper assessment to the NCA. The NCA then informs the ECB and the institutions jointly collect information, assess the appointee's suitability and present a proposal to the supervisory board and the governing council of the ECB.
The Fit and Proper Guide acknowledges that the fit and proper assessment should be proportionate to the size of the supervised entity and the nature, scale and complexity of its activities, and should fit the particular position to be filled.
The Fit and Proper Guide provides a detailed description of criteria for determining suitability:
The Fit and Proper Guide emphasises the importance and advantageousness of interviews in the assessment process and provides further guidance on the interview process. Interviews will be conducted for any new appointments to CEO and chairman positions at standalone banks and the top banks of groups, as these positions entail the most risk. Otherwise interviews are a discretionary tool for fit and proper assessments.
The Fit and Proper Guide also provides an overview on the assessment process, wherein the NCA functions as an entry point and the ECB is the decision-maker. Different procedures are followed for new appointments, renewals, changes of roles or resignations, new facts and licensing as well as qualifying holding procedures.
An appointee is either considered fit and proper or not. However, the ECB has the power to include recommendations, conditions or obligations in positive decisions. A categorisation of such decisions is also included.
As outlined above, the Fit and Proper Guide is intended to be a practical tool that will be updated regularly to reflect new developments and experience gained in supervisory practice. We will monitor these developments and provide any updates.
 Article 4(1)(e) of Council Regulation (EU) No 1024/2013 of 15 October 2013 (SSM Regulation); Articles 93 and 94 of Regulation (EU) No 468/2014 (SSM Framework Regulation).
 Institutions under the direct supervision of the ECB.