Fit and Proper Assessments within the Single Supervisory Mechanism
27 Pages Posted: 5 Mar 2019
Date Written: March 5, 2019
A fit and proper management body and fit and proper key function holders are key drivers of good governance. The banks are primary responsible for ensuring this, while the assessment by the ECB and national competent authorities have the aim to ensure that banks comply with the requirements regarding robust governance arrangements and the suitability requirements. Over the past years convergence of fit and proper assessments within the SSM has been achieved on the one hand through harmonisation of the rules laid down in CRD IV and the EBA Guidelines on suitability, and on the other hand through consistent application of these rules. Nevertheless, there is still a wide variety of national practices regarding fit and proper assessments, due to the fact that there are limits to convergence in this area. These relate to:
(1) the transposition of and the level of harmonisation by CRD IV;
(2) the limits to harmonisation through the EBA guidelines on suitability; and
(3) the requirement for the ECB to apply national law.
With every step towards more harmonisation and consistency, the existing national variations will become more obvious and underline the need for more harmonisation.
Keywords: fit and proper testing, European Central Bank, Single Supervisory Mechanism, European Banking Union, CRD IV, EBA Guidelines on suitability, harmonisation, limits to convergence
JEL Classification: G01, G21
Suggested Citation: Suggested Citation