New "fit & proper" manual
On 20 December 2022, the National Bank of Belgium (NBB) updated its “fit & proper” Manual, which sets out the prudential standards to be met by all financial institutions under its supervision regarding the assessment of the suitability of directors, senior managers (in particular members of the management committee) and persons responsible for independent control functions. This update follows a number of regulatory developments at international and national level.
One of the main changes is the reclassification of the suitability assessment criteria in 5 components: managers must (i) possess knowledge, experience and skills, (ii) have professional integrity, (iii) act with independence of mind, (iv) be able to commit sufficient time to their position, and (v) have a profile that adequately complements that of their colleagues on the management body (collective suitability).
The new manual raises the supervisory expectations regarding time commitment (recommending that members of the management committee and persons responsible for control functions perform their duties full-time), independence of mind (ability to ask questions, challenge proposals, resist groupthink and not be subject to conflicts of interest), collective suitability (highlighting areas related to ICT security, environmental and climate risks, prevention of money laundering and terrorist financing and, for banks, diversity in the composition of management bodies). In addition, a number of new requirements have been clarified at the organisational level, such as the development of a suitability and, where appropriate, diversity policy, the implementation of procedures and processes for the selection and succession planning of managers, etc.
The new manual also emphasises that financial institutions should monitor suitability continuously, and sets out a list of events that should trigger a reassessment of the individual or collective suitability of managers.