FIT The Fit and Proper test for Approved Persons

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FIT 1

General

FIT 1.1

Application and purpose

  • 01/12/2004

FIT 1.1.1

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FIT applies to:
(1) a firm;
(2) an applicant for Part IV permission;
(3) and EEA firm, a Treaty firm or a UCITS qualifier that wishes to establish a branch into the United Kingdom using EEA rights, Treaty rights or UCITS directive rights (see SUP 10.1.12 G and SUP 10.1.13 R ) , or apply for a top-up permission (see SUP 10.1.14 R );
(4) an approved person; and
(5) a candidate.

FIT 1.1.2

handbook-guidance
The purpose of FIT is to set out and describe the criteria that the FSA will consider when assessing the fitness and propriety of a candidate for a controlled function (see generally SUP 10 on approved persons). The criteria are also relevant in assessing the continuing fitness and propriety of approved persons. The criteria that the FSA will consider in relation to an authorised person are described in COND.

FIT 1.2

Introduction

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FIT 1.2.1

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Under section 61(1) of the Act (Determination of applications), the FSA may grant an application for approval made under section 60 (Applications for approval) only if it is satisfied that the candidate is fit and proper to perform the controlled function to which the application relates.

FIT 1.2.2

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The method of applying for approved person status is set out in SUP 10.

FIT 1.2.3

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Under section 63(1) of the Act (Withdrawal of approval), the FSA may withdraw its approval if it considers that the person in respect of whom the approval was given is not fit and proper to perform the controlled function to which the approval relates.
  • 01/09/2003

FIT 1.2.4

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The Act does not prescribe the matters which the FSA should take into account when determining fitness and propriety. However, section 61(2) states that the FSA may have regard (among other things) to whether the candidate or approved person is competent to carry out a controlled function.

FIT 1.2.4A

handbook-guidance
Under Article 5(1)(d) of the MiFID Implementing Directive and Article 31 and 32 of MiFID, the requirement to employ personnel with the knowledge, skills and expertise necessary for the discharge of the responsibilities allocated to them is reserved to the firm'sHome State. Therefore, in assessing the fitness and propriety of a person to perform a controlled function solely in relation to the MiFID business of an incoming EEA firm, the FSA will not have regard to that person's competence and capability.

FIT 1.3

Assessing fitness and propriety

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FIT 1.3.1

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The FSA will have regard to a number of factors when assessing the fitness and propriety of a person to perform a particular controlled function. The most important considerations will be the person's:
(1) honesty, integrity and reputation;
(2) competence and capability; and
(3) financial soundness.

FIT 1.3.2

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In assessing fitness and propriety, the FSA will also take account of the activities of the firm for which the controlled function is or is to be performed, the permission held by that firm and the markets within which it operates.

FIT 1.3.3

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The criteria listed in FIT 2.1 to FIT 2.3 are guidance and will be applied in general terms when the FSA is determining a person's fitness and propriety. It would be impossible to produce a definitive list of all the matters which would be relevant to a particular determination.

FIT 1.3.4

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If a matter comes to the FSA's attention which suggests that the person might not be fit and proper, the FSA will take into account how relevant and how important it is.

FIT 1.3.5

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During the application process, the FSA may discuss the assessment of the candidate's fitness and propriety informally with the firm making the application and may retain any notes of those discussions.

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FIT 2

Main assessment criteria

FIT 2.1

Honesty, integrity and reputation

  • 01/12/2004

FIT 2.1.1

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In determining a person's honesty, integrity and reputation, the FSA will have regard to all relevant matters including, but not limited to, those set out in FIT 2.1.3 G which may have arisen either in the United Kingdom or elsewhere. The FSA should be informed of these matters (see SUP 10.13.16 R ), but will consider the circumstances only where relevant to the requirements and standards of the regulatory system. For example, under FIT 2.1.3 G(1), conviction for a criminal offence will not automatically mean an application will be rejected. The FSA treats each candidate's application on a case-by-case basis, taking into account the seriousness of, and circumstances surrounding, the offence, the explanation offered by the convicted person, the relevance of the offence to the proposed role, the passage of time since the offence was committed and evidence of the individual's rehabilitation.

FIT 2.1.2

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In considering the matters in FIT 2.1.1 G, the FSA will look at whether the person's reputation might have an adverse impact upon the firm for which the controlled function is or is to be performed and at the person's responsibilities.

FIT 2.1.3

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The matters referred to in FIT 2.1.1 G to which the FSA will have regard include, but are not limited to:
(1) whether the person has been convicted of any criminal offence; this must include, where provided for by the Exceptions Ordertothe Rehabilitation of Offenders Act 1974, any spent convictions; particular consideration will be given to offences of dishonesty, fraud, financial crime or an offence whether or not in the United Kingdom or other offences under legislation relating to companies, building societies, industrial and provident societies, credit unions, friendly societies, banking and or other financial services, insolvency, consumer credit companies, insurance, and consumer protection, money laundering, market manipulation or insider dealing ;
(2) whether the person has been the subject of any adverse finding or any settlement in civil proceedings, particularly in connection with investment or other financial business, misconduct, fraud or the formation or management of a body corporate;
(3) whether the person has been the subject of, or interviewed in the course of, any existing or previous investigation or disciplinary proceedings, by the FSA , by other regulatory authorities (including a previous regulator), clearing houses and exchanges, professional bodies, or government bodies or agencies;
(4) whether the person is or has been the subject of any proceedings of a disciplinary or criminal nature, or has been notified of any potential proceedings or of any investigation which might lead to those proceedings;
(5) whether the person has contravened any of the requirements and standards of the regulatory system or the equivalent standards or requirements of other regulatory authorities (including a previous regulator), clearing houses and exchanges, professional bodies, or government bodies or agencies;
(6) whether the person has been the subject of any justified complaint relating to regulated activities;
(7) whether the person has been involved with a company, partnership or other organisation that has been refused registration, authorisation, membership or a licence to carry out a trade, business or profession, or has had that registration, authorisation, membership or licence revoked, withdrawn or terminated, or has been expelled by a regulatory or government body;
(8) whether, as a result of the removal of the relevant licence, registration or other authority, the person has been refused the right to carry on a trade, business or profession requiring a licence, registration or other authority;
(9) whether the person has been a director, partner, or concerned in the management, of a business that has gone into insolvency, liquidation or administration while the person has been connected with that organisation or within one year of that connection;
(10) whether the person, or any business with which the person has been involved, has been investigated, disciplined, censured or suspended or criticised by a regulatory or professional body, a court or Tribunal, whether publicly or privately;
(11) whether the person has been dismissed, or asked to resign and resigned, from employment or from a position of trust, fiduciary appointment or similar;
(12) whether the person has ever been disqualified from acting as a director or disqualified from acting in any managerial capacity;
(13) whether, in the past, the person has been candid and truthful in all his dealings with any regulatory body and whether the person demonstrates a readiness and willingness to comply with the requirements and standards of the regulatory system and with other legal, regulatory and professional requirements and standards.

FIT 2.2

Competence and capability

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FIT 2.2.1

handbook-guidance
In determining a person's competence and capability, the FSA will have regard to all relevant matters including but not limited to:
(1) whether the person satisfies the relevant FSA training and competence requirements in relation to the controlled function the person performs or is intended to perform;
(2) whether the person has demonstrated by experience and training that the person is suitable, or will be suitable if approved, to perform the controlled function.

FIT 2.2.2

handbook-guidance
A person may have been convicted of, or dismissed or suspended from employment for, drug or alcohol abuses or other abusive acts. This will be considered only in relation to a person's continuing ability to perform the particular controlled function for which the person is or is to be employed.

FIT 2.3

Financial soundness

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FIT 2.3.1

handbook-guidance
In determining a person's financial soundness, the FSA will have regard to any factors including, but not limited to:
(1) whether the person has been the subject of any judgment debt or award, in the United Kingdom or elsewhere, that remains outstanding or was not satisfied within a reasonable period;
(2) whether, in the United Kingdom or elsewhere, the person has made any arrangements with his creditors, filed for bankruptcy, had a bankruptcy petition served on him, been adjudged bankrupt, been the subject of a bankruptcy restrictions order (including an interim bankruptcy restrictions order), offered a bankruptcy restrictions undertaking, had assets sequestrated, or been involved in proceedings relating to any of these.

FIT 2.3.2

handbook-guidance
The FSA will not normally require the candidate to supply a statement of assets or liabilities. The fact that a person may be of limited financial means will not, in itself, affect his suitability to perform a controlled function.

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Transitional Provisions and Schedules

FIT TP 1

Transitional provisions

FIT TP 1.1
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FIT Sch 1

Record keeping requirements

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FIT Sch 1.1

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FIT Sch 2

Notification requirements

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FIT Sch 2.1

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FIT Sch 3

Fees and other required payments

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FIT Sch 3.1

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FIT Sch 4

Powers exercised

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FIT Sch 4.1

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FIT Sch 5

Rights of action for damages

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FIT Sch 5.1

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FIT Sch 6

Rules that can be waived

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FIT Sch 6.1

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