¿Why Fit & Proper?

The "fit and proper" criteria (or "fit and proper test") make reference to requirements for evaluating managers, directors and shareholders. Particularly, the ability to fulfill their duties ("fitness") as well as their integrity and suitability ("propriety") are examined.

This concept is a standard in corporate governance of financial institutions. Most financial supervision organisms include these requirements in their regulatory frameworks to ensure that institutions have a prudent and solid management. Senior management, directors and shareholders who hold influence over the entity's operations must meet the "fit and proper" criteria.

Fitness requirements take into consideration formal qualifications, previous experience and career. On the other hand, integrity and suitability analyze aspects such as criminal records, financial position, civil actions against third parties, sanctions applied by regulators of other similar industries, questionable business practices and rejection or expulsion from professional associations.

Fit & Proper LLC was born in 2003 inspired by this concept, with the goal of providing advice on issues related to the financial system and staying current on best practices, always respecting the principle on which it built its foundations and growing in association with fit and proper professionals.

More information about the fit and proper criteria can be found in the following documents of the Committee on Banking Supervision (BCBS):

• BCBS, “Fit and Proper Principles paper”, february 1999, http://www.bis.org/publ/bcbs47c4.pdf
• BCBS, “Corporate principles for banks”, july 2015, http://www.bis.org/bcbs/publ/d328.pdf
• BCBS, “Core principles for effective banking supervision”, september 2012, www.bis.org/publ/bcbs230.pdf. Particularly, principle 5 (licensing criteria), principle 12 (consolidated supervision), principle 14 (corporate governance).

For a description of the practices in relation to the fit and proper criteria refer to the following document:

• Financial Stability Board (FSB), “Thematic Review on Risk Governance”, february 2013, http://www.financialstabilityboard.org/wp-content/uploads/r_130212.pdf

Additionally, the following list can be consulted for complementary information about fit and proper criteria:

• International Association of Deposit Insurers (IADI), “Core Principles for Effective Deposit Insurance Systems”, november 2014, http://www.iadi.org/docs/cprevised2014nov.pdf
• BCBS, “Principles for the supervision of financial conglomerates”, september 2012, http://www.bis.org/publ/joint29.pdf
• International Organization of Securities Commissions (IOSCO), “Fit and Proper Assessment – Best Practice”, december 2009, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD312.pdf
• International Association of Insurance Supervisors (IAIS), “Supervisory Standard on Fit and Proper Requirements and Assessments for Insurers”, october 2005, http://iaisweb.org/index.cfm?event=openFile&nodeId=34132