Fitness and propriety

The fit and proper test is a benchmark we use to assess whether you are suitable to perform a controlled function, not an exam you have to pass.

We approve an individual only when we are satisfied they are fit and proper to perform the controlled functions that they have applied for.

When we re-assess existing approved persons these standards also apply - if we find any evidence of non-compliance with the requirements we may take enforcement action against the approved person.

What we look for

When considering a candidate’s fitness and propriety, we look at:

  • honesty (including openness with self-disclosures, integrity and reputation)
  • competence and capability
  • financial soundness

More details about what we understand by each of these can be found in the Handbook.

Expectations

Individuals applying for approved person status must understand the importance of establishing an honest relationship with us from the start.

The application form’s fitness and propriety section asks questions of fact requiring a ‘yes’ or ‘no’ answer about particular actions, rather than whether the candidate felt the action was justified. Some questions include the word ‘ever’, meaning that the required answers are not restricted to a specified period.

Firms must not make an assessment on whether to disclose a matter, and should disclose all information in the supplementary information section of the application (ie Form A). Where a firm believes a disclosure may not affect the individual’s fitness and propriety, it should provide additional information explaining why the firm considers it not to be the case.

The questions in the fitness and propriety and supplementary information sections of the application to perform a controlled function (Form A) provide a useful but non-exhaustive guide to issues that may impact on an approved person’s ongoing fitness and propriety.

Disclosing information

You must disclose everything to us when you apply. If in doubt, please let us know as much as possible, even if it may not seem relevant.

We expect you to be open with us. This will count in your favour if we need to look at your application more closely because of adverse information we discover either from you or from a third party. The success of your application could be affected if we find that you have withheld information deliberately or provided false or incomplete facts. Giving us false or misleading information may be a criminal offence.

We suggest that, if after reading the advice on these pages you remain uncertain about disclosing convictions, you should seek legal advice.

Due diligence

You must establish your own criteria of the due diligence before submitting an application to us. However, the list below, while not definitive, is the information we consider helpful for firms assessing a candidate’s fitness and propriety:

  • regulatory references
  • qualification certificates
  • credit checks
  • criminal Records checks
  • directorship checks

Firms must make sure the application has been completed by the firm and the candidate, and accurately records and discloses all information. A copy of the application, signed by the candidate and firm must be retained by the firm and provided to us on request.

Regulatory reference

You should conduct appropriate due diligence on candidates, including acquiring references from the candidate’s previous employer(s), as part of assessing a candidate’s fitness and propriety.

Of particular relevance are references from other authorised firms, known as ‘regulatory references’.

We generally expect firms to acquire regulatory references to cover the past 5 years. However, this will depend on the candidate’s regulatory history.

What the reference should include

The former employer should provide information about, but not limited to:

  • any outstanding liabilities of the candidate from commission payments
  • any relevant outstanding or upheld complaint against the candidate from an eligible complainant
  • any information about the:
    • fitness and propriety section (Section 5) of the application for approval (Form A)
    • the main assessment criteria of the fit and proper Test (FIT 2).

Difficulties in obtaining the reference

Our Handbook requires authorised firms to give a reference to the applicant firm if asked, as soon as possible.

If the former employer is not willing to provide a regulatory reference and is an authorised firm, you should:

  • explain you are requesting the reference under SUP 10A.15.1 of the FCA Supervision Manuals
  • inform your FCA case officer (if appointed), call the helpline on 0300 500 0597 or email us.