Suitability of managers and those responsible for control functions

Regulatory framework

  1. Solvency II Law: Articles 40, 41, 81 to 83 (Fit & Proper and external functions/incompatibilities) and 93 and 94 (transactions subject to limitation or prohibition and payments subject to being declared null and void)
  2. Delegated Regulation 2015/35: Articles 258(1), (c) (collective skills) and (d) (individual skills), and 273 (F&P requirements)
  3. Underlying thematic NBB Circulars: (i) the new Fit & Proper Handbook attached to the Circular NBB_2018_25, (ii) Regulation of 9 July 2002, Regulation of 6 December 2011 and Circular PPB-2006-13-CPB-CPA of 13 November 2006 on the exercise of external functions, (iii) Circular NBB_2017_21 on loans, credits and guarantees to managers, shareholders and related persons, and (iv) NBB Regulation of 6 February 2018 on the fitness of the persons responsible for the compliance function (Regulation approved by Royal Decree of 15 April 2018).
  4. EIOPA Guidelines: Guidelines 11 to 14

In accordance with the Solvency II Law, directors, members of the management committee and persons responsible for independent control functions in insurance companies must permanently possess the expertise and professional integrity required for their role. They must also devote the necessary time to the exercise of their function in the company and — if they exercise external functions — avoid conflicts of interest. The Law also provides for specific rules for loans and insurance policies for managers and a number of other special transactions.

2.1. ‘Fit & Proper’ checks

The suitability assessment of directors, members of the management committee, persons responsible for independent control functions and branch managers is usually described as the assessment of their ‘Fit & Proper’ nature. For more information on this subject, please refer to the Fit & Proper Handbook. Furthermore, the fitness expected of the person responsible for the compliance function is also specified in the NBB Regulation of 6 February 2018.

2.2. Availability and external functions

The directors, members of the management committee, and persons responsible for independent control functions of insurance companies must devote the necessary time to the exercise of their functions in the company and, if they exercise external functions, avoid conflicts of interest and take into account a number of incompatibilities. In accordance with the Solvency II Law (Article 83) the company introduces internal rules for the external functions and oversees compliance therewith. The Bank recommends that these internal rules be extended to the persons responsible for the independent control functions and include specific rules for these persons (extension of the scope of the internal rules to the persons responsible for the independent control functions, except for the aspects relating to disclosure).

The Regulation of 9 July 2002, Regulation of 6 December 2011 and Circular PPB-2006-13-CPB-CPA give a detailed explanation of the rules that apply to external functions and also points out the incompatibilities established by law for non-executive directors and members of the management committee. These texts remain applicable.

2.3. Loans to managers and other special transactions

To ensure conflicts of interest are managed properly, Article 93 of the Solvency II Law (provision amended in 2017) also lays down specific rules regarding loans, credits, guarantees and (retail life) insurance contracts for managers, shareholders and related persons.. These contracts must be concluded under normal market conditions.

The list of loans, credits and guarantees amounting, on a consolidated basis for a particular person, company or institution, to more than € 100,000 must be sent to the Bank (cf. Chapter 15 of this Circular) using the reporting table provided for this purpose in the Annex to Circular NBB_2017_21.