2.6 Suitability assessment by the supervisor

2.6.1 Timing of the assessment

2:136 The supervisor assesses the suitability of persons who wish to hold a position which requires a suitability assessment before they actually take up the position. The supervisor also carries out an assessment when warranted by facts and/or circumstances. The concrete scope and method of the assessment differ depending on when it takes place. Before taking up the position

2:137 This assessment takes place either when an institution applies for authorisation[1] or when an already authorised institution intends to appoint a person to a position which requires a suitability assessment (including appointments that are subject to the approval procedure for qualified holdings - see the SSM Guide). In the latter case, the assessment can relate to either a person already working in the institution concerned or an external person. While holding the position

2:138 As part of the supervisor’s ongoing prudential supervision, the suitability of the persons concerned is also reassessed if there are new facts and/or circumstances that provide reasonable grounds for such a reassessment. It is for the supervisor to determine what constitutes new facts and/or circumstances.

1) Reassessment based on specific signals

2:139 In practice, the supervisor relies on signals that cast doubt on a person’s suitability and thus may justify the need to review whether the person concerned is sufficiently suitable for the position he/she holds. These signals can be very diverse[2].

2:140 When a person in office is subject to criminal, administrative, civil or disciplinary proceedings that are likely to call into question the expertise and professional integrity of that person, the supervisor may ask the statutory governing body of the institution concerned whether - in the light of the facts with which the person concerned is charged - it considers that it can maintain confidence in that person. The institution must obtain full transparency from the person concerned with regard to the charges against him/her. In any case, the supervisor carries out its own assessment, taking into account the reasoning of the statutory governing body and the nature of the charges.

2:141 Where the supervisor carries out a reassessment, it focuses on the actions and performance of the person concerned in practice. In particular, the supervisor examines how the person concerned has applied his/her knowledge and skills, and whether or not the person’s decision-making and business management demonstrate professional conduct.

2:142 A reassessment may be carried out for one or more persons at the same time, depending on the reason for the reassessment. For instance, if the reassessment was triggered by concerns about the company culture, it is possible that several persons will be reassessed. Conversely, if the reassessment is motivated by concerns about specific activities of the institution (a specific product or market, or a particular internal control line) that fall under a specific person’s duties, it will likely focus on that particular person, without prejudice to the possibility that other persons may subsequently be held liable for failing to perform their supervisory duties.

2:143 The appointment of a new director does not automatically trigger a reassessment of the collective suitability of the members of the institution’s statutory governing body that are already in office. However, a change in the composition of the statutory governing body, whether or not due to the entry into office of a new person, may constitute reasonable grounds for a reassessment of collective suitability. This may be the case inter alia if a person with a certain expertise resigns and no (temporary) replacement is sought or found, or if members of the statutory governing body change positions (e.g. from non-executive to executive director).

2) Reassessment in the absence of specific signals

2:144 The supervisor may also reassess the individual and collective suitability of persons subject to suitability assessment on an ongoing basis ‑ in the absence of specific signals ‑ as part of its general risk-based supervision.

2.6.2 Assessment procedure

2:145 As indicated above, the suitability requirements for institutions subject to direct supervision by the ECB are applied in accordance with the rules of the SSM. Therefore, for more information on the concrete steps of the assessment process, please refer to the SSM Guide. As already mentioned in this Manual, the national competent authorities, in this case the NBB, act as the entry point for initiating the procedure and assist the ECB in the actual assessment process. The final decision on a person’s suitability rests with the ECB. Before taking up the position

2:146 Pursuant to Article 60 of the Banking Law, institutions must inform the supervisor in advance of any proposed appointment, reappointment or non-reappointment, dismissal or resignation of the persons concerned. When a person changes position, including when a significant new division of tasks is established within the statutory governing body, this must be considered as a new appointment.

2:147 In accordance with the principles of sound governance, the supervisor endeavours to reach its decision within a reasonable timeframe, preferably within 2 to 3 months or, for time-consuming or complex cases, within 4 months, as set out in paragraph 179 of Guidelines EBA/GL/2021/06.

2:148 These indicative time limits start from the moment the duly completed forms and all necessary information have been submitted to the supervisor (complete file). If the supervisor requests additional information from the institution, the deadlines are suspended until the relevant information is provided. Institutions are requested to take into account these indicative time limits for timely transmission of the written file through the standard forms.

2:149 The appointment cannot take place before the supervisor has made a decision. The institution may contact the supervisor through the usual channels shortly after sending the duly completed forms in order to find out whether or not the supervisor considers the case as time-consuming or complex. If the case is considered time-consuming or complex, the appointment may, exceptionally, take place under a condition precedent and be made public with mention of this condition.

2:150 When a proposed appointment relates to a person who is being proposed for the first time for a position which requires a suitability assessment, the NBB consults the FSMA[3]. The FSMA sends any relevant factual information to the NBB within one week from receipt of the request for advice. While holding the position

2:151 It is for the supervisor to decide whether the suitability of a person in office should be reassessed. For instance, pursuant to Articles 45, 134 and 135 of the Banking Law, the supervisor may decide to reassess the suitability of the persons concerned as a result of findings or analyses in the context of its supervision of a specific institution. This decision may be based, for example, on reports or findings showing a negative or dismissive attitude towards generally accepted best practice (e.g. regarding transparent and complete information flow to the statutory governing body), the emergence of concrete doubts as to whether the institution, members of its statutory governing body, its senior managers or the persons responsible for its independent control functions in the past or present complied with anti-money laundering and counter-terrorist financing requirements, repeated or deliberate non-compliance with the supervisor’s recommendations, an established lack of availability to attend meetings, disclosure of incomplete or incorrect information to the supervisor or shareholders, an uncooperative attitude towards the supervisor, etc.[4]

2:152 In the event of a reassessment of a person, the supervisor will specify to the institution what information it wishes to receive. The supervisor may request any information necessary for its assessment (including periodic assessments carried out by the institution) or interview the persons concerned.

2:153 When carrying out a reassessment, the supervisor may ask the person concerned to cooperate. If the person refuses to do so, the supervisor may inform the institution in order to obtain the necessary information. If the result is not satisfactory, the supervisor may take administrative measures (in particular the replacement of the person concerned) and/or impose administrative sanctions.

2.6.3 Information for the supervisor’s assessment Sources of information for the supervisor

2:154 In order to obtain as complete a picture as possible of a person’s suitability, the supervisor uses a wide range of information sources, such as:

  • the current standard form, duly filled in and signed by the institution and the person concerned (see Chapter 5 of this Manual), including any information which the supervisor may, if necessary, obtain from the references listed therein;
  • the suitability assessments carried out by the institution, including the assessment of collective expertise by the statutory governing body. This also includes the information and documentation listed in Annex III to Guidelines EBA/GL/2021/06, and the information to be provided on conflicts of interest and time commitment as stipulated in the SSM Guide;
  • the supervisory information and background available to the supervisor as prudential authority;
  • the institution’s documented policy (processes and procedures) that forms the basis for the recruitment of the person and the job profile that the institution has drawn up for the position in question;
  • opinions of the FSMA;
  • opinions of other authorities supervising the institution (such as authorities in charge of anti-money laundering and counter-terrorist financing supervision, financial intelligence units and competent law enforcement authorities, tax authorities, etc.) or authorities that have carried out a suitability assessment of the person concerned in the past;
  • information obtained from judicial authorities;
  • information obtained from EBA databases (e.g. on administrative sanctions or suitability);
  • where applicable, the periodic reassessment of the person concerned carried out by the institution (and recorded in writing) on the basis of the applicable job profile, including the considerations that led to this reassessment;
  • where applicable, in accordance with paragraph 185 of Guidelines EBA/GL/2021/06, information obtained by the supervisor by participating - as an observer - in meetings of the statutory governing body in order to assess its effective functioning;
  • any other information available to the institution that may be relevant for the suitability assessment;
  • public information.

2:155 The supervisor is authorised to request any information it considers necessary to assess the suitability of a person[5]. It is important that institutions spontaneously and systematically inform the supervisor of any changes to their suitability and periodic assessment policies, for example in an annex to their internal governance memorandum. However, such policy changes do not automatically trigger a reassessment. Deliberate withholding of information or transmission of incorrect information

2:156 The institution and the person to be assessed must provide the supervisor with accurate and complete information through the standard forms and upon its request. If there is doubt as to the relevance or importance of any information, the institution should nevertheless transmit the information or contact the supervisor through the usual channels to verify whether it is necessary to do so. Convictions of any kind must always be mentioned on the forms. Only the supervisor is authorised to judge to what extent they are relevant or important to the suitability assessment.

2:157 A finding of non-compliance in this respect will have a negative impact on the supervisor’s assessment. The supervisor considers any failure to transmit relevant and important information as supervisory background information. The supervisor may detect such non-compliance through any source of information.

2:158 Any deliberate withholding of information will immediately lead to a refusal, as this shows a lack of transparency towards the supervisor.

2.6.4 Interview technique

2:159 As part of a suitability assessment, the supervisor may choose to interview the person concerned. It will do so in particular if it considers that a discussion with the person concerned is desirable or necessary to obtain a complete and clear picture of that person’s expertise and/or professional integrity. In this respect, the supervisor will apply a risk-based approach and take into account the institution’s nature, size and risk profile, the position envisaged and any other details which might raise questions about the information provided by the institution and the person concerned. As a rule, in the case of significant institutions, an interview is always conducted for new appointments to the position of CEO (or equivalent position) or chair of the statutory governing body. In all other cases, depending on specific needs, interviews can also be used as a tool for assessing skills and integrity. If concerns remain after the initial interview, a second, specific interview may be held to address them.

2:160 The interview panel consists of at least two members. For applicants for the position of Compliance Officer, the interview may be conducted jointly with the FSMA.

2:161 During this interview, the supervisor verifies whether the image that the institution has created of a person’s suitability matches the way in which that person presents himself/herself during the interview, possibly taking into account other supervisory information and background relating to the institution or the person concerned. The interview also allows the supervisor to ensure that the person concerned is well informed of its own expectations and those of the institution. Where applicable, the supervisor will draw the institution’s attention to areas where further efforts are needed (e.g. a lack of knowledge about a specific subject).

2:162 In principle, the interview takes place without the institution being present, although the supervisor may decide otherwise.

2:163 When a person leaves a position, it can be particularly useful for the supervisor to conduct an exit interview to obtain further details about the circumstances in which the person is leaving the position or about the governance of the institution in general.

2.6.5 Outcome and consequences of the assessment

2:164 Upon completion of the suitability assessment (as the case may be before or during the performance of a specific position), the supervisor immediately informs the institution and the person concerned of the outcome of the assessment and, where appropriate, of some underlying findings.

2:165 Where appropriate, the supervisor may accompany its approval decision with ancillary provisions to remedy any minor shortcomings found. Such ancillary provisions may not concern aspects related to professional integrity. They may take the form of recommendations[6], but also of conditions[7] or obligations[8]. In the latter case, as indicated in the SSM Guide, the supervisor clearly defines the conditions or obligations and sets a relatively short deadline for their fulfilment. As suitability is permanent, the supervisor at all times has the possibility to monitor compliance with such conditions or obligations, and, if necessary, to carry out a reassessment. For further information on the consequences of a positive decision to which a condition or obligation is attached, see the SSM Guide (Sections 7.3. to 7.5.) and paragraphs 191 to 193 of Guidelines EBA/GL/2021/06.

2:166 Where an institution fails to provide the supervisor with sufficient information regarding the suitability of a person to be assessed, the supervisor either informs the institution that the appointment of the person concerned cannot be approved because his/her suitability has not been sufficiently demonstrated, and requests the institution to withdraw the file, or takes a negative decision.

2:167 Any negative decisions by the supervisor as to a person’s suitability are always thoroughly justified, as stated in the SSM Guide. As indicated in the SSM Guide, negative decisions can be appealed against before the Administrative Board of Review or before the Court of Justice of the European Union. The effective possibilities of appeal are specified in the notification letter.

2:168 Finally, it should be noted that the supervisor may also - irrespective of any formal positive, negative or conditional suitability decision - contact the institution to provide feedback on a submitted application. For example, if the institution withdraws its application in the course of the supervisor’s examination of the file, the latter may provide feedback on the issues identified, as part of the institution’s responsibility for assessing suitability on the one hand, and/or the broader governance perspective on the other. Where necessary, the supervisor may also impose appropriate prudential measures to remedy certain deficiencies in the institution's suitability policy or governance.

[1] For appointments considered in the context of an authorisation application, the same suitability assessment criteria should be applied and the assessment procedure should be applied in broadly the same way, taking into account the specificities of the authorisation context. However, the supervisor makes its decision according to an ad hoc schedule, so that the taking up of the position coincides with the authorisation decision.

[2] For example the opening of or developments in criminal, civil, administrative or disciplinary proceedings, the existence of reasonable grounds to suspect that money laundering or terrorist financing has been or is being committed or attempted or there is an increased risk thereof in connection with the institution concerned, an unexpected change in the institution’s results, concerns about the business model applied, concerns about the integrity and control of the institution’s management, expansion of the institution’s activities abroad, outsourcing of (core) tasks, systematic lack of response or late response to requests for information made by the supervisor, failure to comply with certain conditions or obligations imposed by the supervisor, high staff turnover, poor administration and (repeated) violations of laws and regulations. In certain cases, it is a combination of signals that leads the supervisor to doubt a person’s suitability.

[3] Article 60, § 2 of the Banking Law.

[4] Explanatory memorandum to the Law of 5 December 2017 containing various financial provisions, Parliamentary Documents, Chamber, 2017-2018, Doc. 54 - 2682/001, p. 24.

[5] Article 36/19 of the Law of 22 February 1998 establishing the organic statute of the NBB.

[6] Recommendations are intended to encourage best practices within institutions and to highlight desirable improvements. The supervisor can formulate recommendations not only in the context of suitability assessments, but in all areas of prudential supervision. 

[7] A condition is a requirement imposed on the institution subject to prudential supervision (and which may also have direct implications for the appointee) without which a negative decision would be issued. The most common conditions include: (i) a commitment to undergo specific training; (ii) relinquishment of a management position, mandate or other position outside the institution; (iii) for persons responsible for independent control functions (who are just below management committee level), a probationary period at the end of which the supervisor may decide whether or not to validate its initial positive decision.

[8] The supervisor’s decision may also include an obligation to provide specific information for the purposes of the ongoing fit and proper assessment or to adopt a specific measure relating to fitness and propriety which does not affect the appointee but the entire supervised institution. Unlike a condition, non-compliance with an obligation does not automatically affect the fitness and propriety of the appointee. The most common obligations are: (i) reporting ongoing legal proceedings; (ii) responding to requests for improvement of written policies on conflicts of interest; (iii) responding to requests for improvement in the area of collective suitability or diversity.