European Securities and Markets Authority and European Banking Authority Final Guidelines on Suitability of Management Body Members and Key Function Holders
03/21/2018Following consultation in late 2017, the European Securities and Markets Authority and European Banking Authority have jointly published final Guidelines on the assessment of the suitability of members of management bodies and key function holders in credit institutions, investment firms, financial holding companies and mixed financial holding companies. These assessments are required under the Capital Requirements Directive and the revised Markets in Financial Instruments Directive.
Under the CRD and MiFID II, an assessment of the suitability of members of a management body should take into account factors such as sufficiency of time commitment, honesty, integrity and independence of mind of a member of the management body. The management body must have adequate collective knowledge, skills and experience among its members. Firms should devote adequate human and financial resources to the induction and training of such members. Diversity is also to be taken into account when selecting members of the management body. In the case of key function holders, the Guidelines also specify requirements regarding the suitability of the heads of internal control functions and the chief financial officer of credit institutions and certain investment firms. The Guidelines apply to any other persons assessed as key function holders under the firm's risk-based approach. An Annex is provided as a template for firms to record the results of relevant assessments.
The Guidelines will apply from June 30, 2018 to national regulators across the EU, as well as to institutions on an individual and consolidated basis. They will supersede previous EBA Guidelines on the assessment of the members of the management body and key function holders. National regulators must notify the EBA and ESMA by May 21, 2018 whether they comply or intend to comply with the Guidelines, or alternatively give reasons for non-compliance.
View the Guidelines and Annex.
View the compliance notification form.