Response to consultation on draft Joint ESMA and EBA Guidelines on the assessment of the suitability of members of the management body and key function holders
Question 1: Are subject matter, scope of application, definitions and date of application appropriate and sufficiently clear?
Date if application: According to the EBA, as mentioned during the public hearing, the revised Guidelines and the RTS should be published at the end of February 2027. The GL will be applicable 6 months after publication of the translations. We recommend aligning this date of application with the date of national transposition of CRD6. This will avoid legal uncertainty and potential conflicts between soft law and national rules, would the CRD6 not have been transposed yet in some jurisdictions.
Criterium of materiality: Several obligations are linked to a materiality criterium that is left undefined (e.g. (not exhaustive but illustrative) in para 30.d, para 36.d, para 100.c: presumption of lack of independency if the director has a material financial or business relationship with the entity, para 100.g and h, … ) which leaves the door open for supervisory discretion => for the sake of predictability it would be helpful to define/clarify the materiality concept where possible.
Simplification: In our view, the draft Guidelines does not reflect the EU global objective of simplification, particularly regarding their scope, details and repetitions, references to additional suitability requirements in other Guidelines and the complex description of the assessment procedure. We recommend avoiding granular and detailed approaches with unnecessary documentation as well as to avoid duplicating existing requirements.
Subject matter: Febelfin notes that while Paragraph 6 clarifies the notions of good repute, honesty, integrity, and sufficient knowledge, skills and experience for key function holders, no explicit reference is made to time commitment requirements for such roles. This appears to be inconsistent with Belgian law, as the Belgian Banking Law explicitly provides for time commitment requirements applicable to key function holders (Article 61 & 62).
Definitions : The definition of “significant influence over the direction of an entity” is considered insufficiently clear and lacks a legal basis. In particular, it is unclear to which entities it is applicable to. Further clarification is required to avoid inconsistent interpretations across institutions and competent authorities
Question 2: Are the changes made in Title II appropriate and sufficiently clear?
Additional duties: It should be clarified what should be understood by ‘additional duties’ in par. 31. For instance, we consider this notion should not cover the temporary assumption of certain responsibilities for reasons of business continuity (e.g. covering during an absence) but should be limited to material and structurally embedded changes that have a lasting impact on availability.
Do you have any views on the provisions regarding these independence criteria? Please explain any aspects that may influence the effectiveness, clarity, or implementation of these independence criteria across different business models/types of institutions.
NA
Question 4: Are the changes made in Title III appropriate and sufficiently clear?
Benchmarking time commitment : Paragraph 47k refers to the use of available benchmarking on time commitment, for example benchmarks developed by competent authorities or by the EBA. Febelfin considers that benchmarking by national competent authorities could be useful. However, such benchmarks would only be meaningful and operational if they are made publicly available, thereby ensuring transparency, consistency, and equal treatment across institutions.
Sufficient time commitment: Paragraph 50 provides that entities should monitor and record whether the members of the management body commit sufficient time to performing their functions…”. In Belgium, such recording already takes place today in the NBB’s system. Would the use of that platform be considered sufficient, or would entities still be required to keep these records in their own internal systems as well?
Suitability requirements for ARTs and CASPs: according to paragraph 70 & 78, Members of the management bodies of issuers of asset-referenced tokens (ARTs) or crypto-asset service providers (CASPs) must -in terms of (collective) knowledge, skills and experience- additionally meet the requirements set out in paragraph 24 of Section C.2.2 and paragraph 28 of Section C.2.3 of the ‘Joint EBA and ESMA Guidelines on the suitability assessment of members of the management body of issuers of asset-referenced tokens and of crypto-asset service providers’. The reference to these paragraphs 24 and 28 is not entirely clear as paragraph 28 of Section C.2.3 refers back to the whole of Section C.2.2. However, as the draft Guidelines refer only to paragraph 24 of Section C.2.2, we assume that the other paragraphs of Section C.2.2 do not apply.
Assessment of Good Repute and ML/TF Risk Factors: Febelfin raises several points of clarification in relation to Paragraph 86:
- Reference to the relevant entity: Throughout this paragraph, it is unclear to which entity the text refers. It is not explicit whether the assessment concerns the entity submitting the suitability assessment or another entity connected to the individual concerned. Clarification is required to ensure legal certainty and consistent application.
- Definition of “close family members”: The paragraph refers to “close family members” in the context of ML/TF risk exposure. However, no definition of this concept is provided. A clear and harmonized definition would be necessary to avoid divergent interpretations.
- Reference to Politically Exposed Persons (PEPs): The paragraph suggests that being or having been a PEP may constitute a factor indicating increased ML/TF risk. Febelfin notes that an individual may qualify as a PEP solely due to holding or having held a directorship mandate in a public entity. Such status, in itself, should not automatically give rise to a suspicion of ML/TF exposure. We therefore consider that this statement should be rephrased to avoid overly broad or disproportionate implications.
Cooling-off period for former executives: The draft introduces, in paragraph 93h, a cooling-off period of three years for a former CEO or executive director who takes on a chairperson role or a supervisory function within the same entity. Febelfin considers that a mandatory cooling-off period of three years is overly restrictive given the scarcity of eligible profiles. Potential conflicts of interest related to the transition from CEO to Chairman can be adequately addressed through existing or enhanced conflict of interest measures including clear segregation of executive and supervisory responsibilities. Furthermore, the provision does not sufficiently account for the diversity of governance structures across EU jurisdictions; in Belgium we have a specific governance structure in which executive directors are ALSO (i.e. AT THE SAME TIME) members of the supervisory board. In addition, clarification is requested as to whether this cooling-off period would also apply within a group context, for example where an executive of a parent undertaking becomes a non-executive member of the management body of a subsidiary for which the parent undertaking is responsible.
Question 5: Are the changes made in Title IV appropriate and sufficiently clear?
We note a drafting issue in Paragraph 106, where reference is made to “the institution’s” instead of “institutions”. This appears to be a typographical error that should be corrected.
Question 6: Are the changes made in Title V appropriate and sufficiently clear?
Gender representation - wording: Paragraph 116 refers to “the male and female gender” in the context of appropriate representation within the management body. Febelfin considers that this wording is not sufficiently inclusive and would benefit from being reformulated in a more inclusive manner.
Gender Balance in the Nomination Committee: The draft guidelines (paragraph 123) provides that, where possible, the composition of the nomination committee should be gender balanced. Nomination committees count often only a limited number of members; imposing strict gender‑balance requirements would, in practice, lead to significant constraints in composing committees in a workable and sustainable manner. Febelfin also notes that this recommendation has no legal basis in the CRD. It should be removed.
Question 7: Are the changes made in Title VI appropriate and sufficiently clear?
NA
Question 8: Are the changes made in Title VII appropriate and sufficiently clear?
Allocation of individual roles and duties: Paragraph 167 states that entities should ensure that all material individual roles and duties of the management body are allocated to a member of the management body. Similarly, Paragraph 173c refers to the performance of roles and duties set out in individual statements by members of the management body. We wish to emphasize that this does not prejudice the legal principle of collective liability of the management body under Belgian law. It is requested to clarify that this requirement applies only to members of the management body in their management function, in accordance with art. 88.3 CRD.
Question 9: Are the changes made in Title VIII appropriate and sufficiently clear?
Maximum Assessment Period by Competent Authorities: Paragraph 208 maintains a maximum period of four months for competent authorities to perform a suitability assessment. We note that this timeline remains unchanged. In light of the increasing use of digital processes and new technologies, Febelfin questions whether these timelines could be revisited and potentially shortened.
Enhanced dialogue between the competent authorities and large entities: Do we correctly understand, in paragraph 217, that this enhanced dialogue applies only to members of the management body in their management capacity and the chair of the supervisory function? If this is the case, why are the RTS not limited to these persons, given that both the enhanced dialogue and the RTS refer to Article 91(1d) of the CRD? The description of the assessment procedure by the supervisor in Chapter VIII of the draft Guidelines, and in particular the distinction between ex-ante and ex-post assessment (e.g., section 24, which apparently only applies to ex-post assessment), is very unclear. A simplification would definitely be appropriate here.
Question 10: Are the changes made in Title IX appropriate and sufficiently clear?
NA
Question 11: Are the changes made to Annex 1 and Annex II appropriate and sufficiently clear?
NA
Question 12: Is the table on scope of application of the Joint Guidelines appropriate and sufficiently clear?
NA