{"id":12769,"date":"2022-08-06T20:05:42","date_gmt":"2022-08-06T20:05:42","guid":{"rendered":"http:\/\/legalblog.ie\/?p=12769"},"modified":"2024-02-17T18:03:12","modified_gmt":"2024-02-17T18:03:12","slug":"fitness-probity","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/fitness-probity\/","title":{"rendered":"Fitness &#038; Probity"},"content":{"rendered":"<p>Approval Regime<\/p>\n<p>The Fitness and Probity regime and the fitness and probity requirements apply to regulated financial service providers since December 2011. Senior control positions are prescribed, Preapproval of controlled functions is required in relation to regulated service providers.<\/p>\n<p>The prior approval of the Central Bank is required before an individual can be appointed to such a position.\u00a0The individual must complete a questionnaire, which is endorsed by the relevant provider and submitted for assessment.<\/p>\n<p>The Central Bank is a competent authority. Since 2014, it is\u00a0 the European Central Bank in relation to the management board of significant credit institutions and new credit institutions and credit institutions applying for authorisation. The EBA publishes guidelines for the assessment of the suitability of members of management boards and key function providers.<\/p>\n<p>The Fitness and Probity Regime applied to credit unions from 1 August 2013. The position of manager and chair of the board are prescribed preapproval controlled functions in the case of the credit union. Accordingly, the approval of the Central Bank is required before an individual may be appointed to such position.<\/p>\n<p>The Fitness and Probity Regime and the fitness and probity requirements apply to regulated financial service providers since December 2011. 46 senior control positions are prescribed, pre-approval controlled functions in relation to regulated service providers. The prior approval of the Central Bank is required before an individual can be appointed to such a position.<\/p>\n<p>The individual must complete a questionnaire, which is endorsed by the relevant provider and submitted for assessment.<\/p>\n<p>The Central Bank is a competent authority since 2014 for the European Central Bank in relation to the management board of significant credit institutions and new credit institutions and credit institutions applying for authorisation.<\/p>\n<p>The EBA publishes guidelines for assessment of the suitability of members of management boards and key function provider.<\/p>\n<p>The Fitness and Probity Regime was applied to credit unions from 1 August 2013. The position of manager and chair of the board are prescribed preapproval control functions in the case of the credit union. Accordingly, the approval of the Central Bank is required before an individual may be appointed to such a position.<\/p>\n<p>Pre-Approval Contr<\/p>\n<p>Pre-approved control functions include<\/p>\n<ul>\n<li>the Executive and Non-Executive Directors,<\/li>\n<li>Chairman of the Board,<\/li>\n<li>Chairman of the Audit, Risk, Remuneration and Nomination Committee,<\/li>\n<li>Chief Executive,<\/li>\n<li>sole trader, members of the partnership,<\/li>\n<li>Head of Finance,<\/li>\n<li>Compliance,<\/li>\n<li>Internal Audit,<\/li>\n<li>Chief Risk Officer,<\/li>\n<li>Head of Compliance with responsibility for Money Laundering;<\/li>\n<li>branch managers of other EEA branch,<\/li>\n<li>Head of Retail,<\/li>\n<li>Chief Operating Officer (generally).<\/li>\n<\/ul>\n<p>In insurance:-<\/p>\n<ul>\n<li>Head of Underwriting,<\/li>\n<li>Investment Claims and<\/li>\n<li>Actuarial functions.<\/li>\n<\/ul>\n<p>In banking:-<\/p>\n<ul>\n<li>Head of Treasury,<\/li>\n<li>Credit, Asset and Liability Management.<\/li>\n<\/ul>\n<p>In the stock exchange:-<\/p>\n<ul>\n<li>Head of Traded Markets,<\/li>\n<li>Head of International Primary Markets,<\/li>\n<li>Head of Regulation,<\/li>\n<li>Head of Operations.<\/li>\n<\/ul>\n<p>In investment firms:-<\/p>\n<ul>\n<li>branch managers in Ireland,<\/li>\n<li>Head of Trading,<\/li>\n<li>Chief Investment Officer,<\/li>\n<li>Head of Investment,<\/li>\n<li>Head of Client Asset Oversight.<\/li>\n<\/ul>\n<p>In investment intermediaries and collective investment schemes:-<\/p>\n<ul>\n<li>Branch Managers in Ireland,<\/li>\n<li>Head of Transfer Agency,<\/li>\n<li>Head of Accounting (Valuations),<\/li>\n<li>Head of Trustee Services,<\/li>\n<li>Head of Custody Services.<\/li>\n<\/ul>\n<p>In UCIT Self Managed Investment Companies or Management Companies:-<\/p>\n<ul>\n<li>Head of Transfer Agency,<\/li>\n<li>Head of Accounting Valuations,<\/li>\n<li>Designated Persons to whom a director may delegate the performance of management functions,<\/li>\n<li>Head of Investor Money Oversight,<\/li>\n<\/ul>\n<p>Payment institutions,<\/p>\n<ul>\n<li>branch managers within the State;<\/li>\n<\/ul>\n<p>Retail credit firms,<\/p>\n<ul>\n<li>Head of Credit,<\/li>\n<\/ul>\n<p>Financial service providers outside Ireland,<\/p>\n<ul>\n<li>manager of the branch.<\/li>\n<\/ul>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/fitness-probity\/#Insurance\" title=\"Insurance\">Insurance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/fitness-probity\/#Requirements_of_Relevant_Person\" title=\"Requirements of Relevant Person\">Requirements of Relevant Person<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Insurance\"><\/span>Insurance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The general requirements apply to the insurance sector. The controlled functions include persons-<\/p>\n<ul>\n<li>With the ability to exercise significant influence on the conduct of affairs of a regulated provider;<\/li>\n<li>ensuring controlling or monitoring compliance by a provider with obligations;<\/li>\n<li>giving advice to a customer of the provider;<\/li>\n<li>arranging financial services for a customer of the provider;<\/li>\n<li>assisting a customer in the making of a claim under an insurance or insurance contract;<\/li>\n<li>determining the outcome of a claim under a contract of insurance;<\/li>\n<li>managing or supervising of those persons in rolls in the above categories<\/li>\n<li>adjudicating on any complaint communicated to the provider by a customer;<\/li>\n<li>insurance and reinsurance intermediaries;<\/li>\n<li>dealing or having control over property of a customer;<\/li>\n<li>dealing in or with property on behalf of a regulated financial service provider.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Requirements_of_Relevant_Person\"><\/span>Requirements of Relevant Person<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The requirements for fitness and probity require that the relevant person<\/p>\n<ul>\n<li>be competent, capable,<\/li>\n<li>act honestly, ethically and with integrity and<\/li>\n<li>be financially sound.<\/li>\n<\/ul>\n<p>He must have the appropriate qualifications, professional and otherwise, experience and skill, either acquired through training or employment. He must be shown to have competence and proficiency to undertake the relevant function through performing the same role in another organisation or previous roles.<\/p>\n<p>The standards in relation to honesty, ethicality and integrity look to past behaviour and events. Previous complaints will be taken into account including, disciplinary proceedings, professional restrictions, suspensions, offences.<\/p>\n<p>Financial soundness requires that the person is not bankrupt or insolvent and his role is not adversely affected by being subject to an unsatisfied judgment debt or being an undischarged bankrupt.<\/p>\n<p>Financial service providers must satisfy themselves on reasonable grounds that persons appointed to preapproved control functions and other control functions comply with the relevant standards. They must analyse the personal competence and probity of the person concerned. Draft guidance has been published in relation to matters to be considered on due diligence.<\/p>\n<p>Fitness implies relevant professional qualifications, an appropriate application and interview process, references and ensuring that the person does not have any inconsistent functions which cause a conflict of interest.<\/p>\n<p>The probity standards include consideration of complaints and other matters affecting the person&#8217;s past conduct. This includes particular matters which have arisen, their seriousness, relevance to the circumstance and the length of time that has elapsed. Evidence of rehabilitation should be considered.<\/p>\n<p>The firm should make reasonable enquiries of appropriate parties including former employers, regulatory authorities as appropriate.<\/p>\n<p>Organisations must identify persons undertaking pre-approved control functions and control functions.<\/p>\n<p>Persons must be identified and records maintained. The list of persons performing such functions must be submitted to the Central Bank. The return where appropriate must confirm that the provider is satisfied that the persons on the list comply with the requisite standards and that the relevant agreement has been obtained from the persons to comply with the standards. Sufficient information must be available so that \u00a0the organisation can conclude that the person meets the requisite standards.<\/p>\n<p>The obligation is a continuing one and is required to be reviewed from time to time. There must be procedures to manage compliance on an ongoing basis. Audits should be undertaken annually without any changes relevant to the standards. Investigations should be undertaken and appropriate remedial action and notification to the Central Bank in the event of noncompliance.<\/p>\n<p>The Central Bank considers the approval process on the basis of online questionnaires. Interviews may be held with the persons who are proposed to hold\u00a0 prior approval control functions.<\/p>\n<p>The provisions do not apply to persons solely acting in accordance with a written script prescribing a course of action. This applies to<\/p>\n<ul>\n<li>a range of routine matters in relation to the provision of financial services, e.g. call centre;<\/li>\n<li>persons performing functions on a temporary basis (provided that the prior approval does not apply. Provided that they must comply with the standards);<\/li>\n<\/ul>\n<p>In the case of outsourcing of control functions, the persons concerned \u00a0must comply with the standards. The \u00a0regulated financial service provider remains responsible for compliance. The outsourcing arrangements should identify the relevant persons.<\/p>\n<p>There is a less intensive regime in respect of persons already performing functions in a pre-control function outside the State. If they take up a similar role in Ireland and agree to comply with standards, obtain confirmation from their own regulator that they can conduct functions in the jurisdiction, they are subject to a reduced regime.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-12769\" data-postid=\"12769\" class=\"themify_builder_content themify_builder_content-12769 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Approval Regime The Fitness and Probity regime and the fitness and probity requirements apply to regulated financial service providers since December 2011. Senior control positions are prescribed, Preapproval of controlled functions is required in relation to regulated service providers. The prior approval of the Central Bank is required before an individual can be appointed to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[166],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12769"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=12769"}],"version-history":[{"count":4,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12769\/revisions"}],"predecessor-version":[{"id":31950,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12769\/revisions\/31950"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=12769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=12769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=12769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}