Assessment of suitability by the financial institution

Although in principle the assessment of suitability takes place either before the person takes up the position or when s/he changes his or her position, when any information appears in the course of a function which is likely to influence a person’s fitness and propriety, the institution must analyse it without delay.

3.5.1 Before taking up a position: function profiles and recruitment policy

The NBB expects institutions to set down a detailed job description in writing clearly stating the way in which the suitability standard works in practice for each position which requires a suitability assessment. It is recommended that institutions should use the various components of this handbook, especially the guidelines on assessment standards, as a frame of reference for the drawing up of their recruitment policies and function profiles.

The institution carries out a “due diligence” investigation, the specific level of which depends upon the planned position. It is recommended that the scope and practical operation of the “due diligence” investigation should be specified in the institution’s recruitment policy. Guidelines EBA/GL/2017/12 and the SSM Guide both contain specific recommendations and guidance (e.g. on the information and documentation to be collected, criteria to be verified, etc.) that the institution may use when assessing the suitability of individuals.

Where the institution has completed the investigation and wishes to consider the person's application for the particular position, it is recommended to record this internal selection decision in writing. The decision should contain not only the selection decision but also any considerations upon which it is based. Where applicable, any agreements which have been reached in order to improve the person in question’s fitness on certain points should also be mentioned.

A properly documented recruitment policy, job descriptions accurately drawn up by the institution and selection decisions stating the grounds for them can be extremely useful as a source of information for the assessment of suitability which is carried out by the NBB subsequently.

3.5.2 In the performance of duties: assessment procedure and periodic assessment

The suitability criterion is of an ongoing nature: the persons concerned must at all times during the performance of their duties be fit and proper.

Where the institution has an appointment committee, said committee should assess the composition and functioning of the governing and management bodies, in particular as regards individual and collective suitability of the members. To this end, the appointment committee should periodically, and at least annually, evaluate (i) the structure, size, composition and performance of the statutory governing body, and (ii) the knowledge, skills, experience and degree of involvement of, on the one hand, the individual members of the statutory governing body, and, on the other hand, the statutory governing body as a whole.

As a result, the necessary evaluation procedures should be put in place to monitor the individual and collective suitability of the persons concerned on an ongoing basis. These procedures must clearly state what measures must be taken by the institution in the event of a negative assessment. The periodic assessments should be in writing, and they should contain, along with the final assessment, the considerations that led to this assessment, as well any shortcomings and the agreements made to remedy them. The ongoing nature of the suitability requirements should also appear in the institution’s training policy.

Furthermore, reference is also made to Guidelines EBA/GL/2017/12, which provide further guidance on the process and criteria to be considered in the ongoing monitoring and reassessment of individual and collective suitability, including the information and documentation to be provided to the supervisor in this respect.

If, as a result of a reassessment, significant shortcomings are identified with regard to the individual or collective suitability of the persons concerned, these should be immediately brought to the attention of the supervisor. It is the primary responsibility of the person concerned and of the institution to immediately report to the supervisor any relevant new fact that may affect suitability: they must always provide the supervisor with correct and complete information so that the latter can form a correct picture of the suitability of the person concerned. Failure to do so may result in the supervisor disqualifying the person concerned, implying that he or she is no longer considered fit. [1]

[1] See inter alia the explanatory memorandum to the Law of 5 December 2017 containing various financial provisions, Parliamentary Documents, 2017-2018, Doc. 54 - 2682/001, p. 24.