We published a consultation paper proposing good practice guidance on assessing F&P in June 2016. Following consideration of the responses by the Working Group, this was followed on 28 February 2017 by the BSB’s first Statements of Good Practice on Fitness and Propriety Assessment and supporting guidance.
Background to the publication of the good practice guidance
The new Certification Regime commenced on 7 March 2016. It requires senior managers to attest annually to the ‘fitness and propriety’ (F&P) of individuals who are managing significant risks. These employees, along with almost all employees in a bank or building society, are also required to act in accordance with new Conduct Rules introduced on the same date.
While the new regulation is clear in its requirement that firms assess the F&P of certified individuals, it leaves the detail of how this should be done largely to firms themselves. In this, it presents firms, therefore, with the collective opportunity to generate far-reaching and positive change through the raising of professional standards across the sector. The new regulatory requirements of the Certification Regime are, seen through this lens, a starting point rather than an end in themselves.
Given the importance of the new regime to standards of both behaviour and competence across the banking sector, the BSB explored with its members the scope for both learning from each other about implementation of the new regime and identifying areas where consistency of approach could be beneficial.
Following these initial discussions, a Certification Regime Working Group drawn from BSB member firms was convened in January 2016 to help to develop a common understanding of the policy and operational issues associated with the Certification regime and to establish good practice guidance and examples. The group met nine times in 2016 and its membership expanded and diversified over this period.
The culmination of the Working Group’s efforts is the publication by the BSB of two documents designed to help firms to use the Certification Regime as a means of raising professional standards. These are:
An analysis of the feedback received during the consultation exercise can be found in the consultation report. The main changes in light of the feedback received during the consultation were:
- the F&P Assessment Principles document is now the primary Statement of Good Practice, with all other documents acting as Supporting Guidance;
- the Definitions, Sources of Information and Assessment Record Template have been combined into a single piece of Supporting Guidance;
- the definition of ‘honesty and integrity’ has been changed
- the Sources of Information have been changed to provide greater clarity on which sources of information are appropriate for different types of assessment (e.g. annual assessment, new to role assessment) and to provide greater clarity as to when some sources of information are likely to be relevant to the consideration of a person’s fitness and propriety; and
- the Assessment Record Template has been shortened and simplified.
The work of the Certification Regime Working Group on assessing fitness and propriety continues, and further proposed Statements of Good Practice and Supporting Guidance will be published for consultation during 2017 covering issues such as:
- identifying and evaluating risks and issues related to Certification i.e. circumstances which, should they materialise, could call into question whether an individual is fit and proper to perform their role;
- assessing the F&P of individuals working outside the UK or moving to the UK from overseas; and
- factors to consider when sharing information about Certified individuals when they move between firms (linked to recent requirements for firms to provide ‘regulatory references’).