Consultation on draft guidelines on the assessment of the suitability of members of the management body and key function holders

The European Banking Authority (EBA) launches today a consultation on the draft guidelines on the assessment of the suitability of members of the management body and key function holders. The proposed Guidelines set out the process, criteria and minimum requirements for assessing the suitability of those persons. Once implemented, the Guidelines will help to ensure the quality of the assessments made. The consultation is open for responses until 18th July and a public hearing will be held on 1st June 2012.

The draft Guidelines contain provisions to be followed by both credit institutions and competent authorities when assessing the suitability of persons. They set out the criteria for the assessment and documentation requirements for institutions. They also contain a notification requirement and provide that in cases where a member of the management body is not suitable, the credit institution and, if necessary, the competent authority shall take appropriate action.

In order to ensure robust governance arrangements and appropriate oversight, the scope of these Guidelines is not limited to members of the management body but extends to the members of the supervisory function and to  key function holders. Moreover, as financial and mixed financial holding companies have significant influence on their credit institutions, they are also included in the Guidelines.

Background

Weak governance arrangements - namely inadequate oversight by and challenge from the supervisory function of the management body - are widely acknowledged to have been underlying causes of the financial crisis. For this reason, article 11 of the Directive 2006/48/EC (CRD) asks the EBA to develop guidelines for the assessment of the suitability of the persons who effectively direct the business of a credit institution.

Consultation process

The EBA invites comments on all matters in this paper.

Please send your comments to the EBA by email to CP-2012-03@eba.europa.eu by 18th July 2012, indicating the reference ‘EBA 2012 CP 03'.
All contributions received will be published following the close of the consultation, unless you request otherwise.

A public hearing will take place at the EBA premises on 1st June from 9.30 to 12.30. To register for the public hearing, click here. The slides presented during the public hearing can be downloaded here