The members of the EACB looked carefully into the revised ECB draft Guide to fit and proper assessments and Fit and proper Questionnaire.
Both documents, compared to their old versions, set out a significant number of new requirements and expectations for banks managers regarding i.e. experience, time commitment and reputation. Diversity issues and climate-related risks are now considered as essential by the ECB. As clarified by the ECB, the enhancements contained in the Guide and questionnaire aim “to raise the bar, increase transparency and improve the quality and efficiency of fit and proper assessments and processes” .
According to EACB members the revised requirements seem often too detailed and not justified for the purpose. Such a high level of details may in fact lead to a loss of transparency and predictability of the fit&proper assessments. In our paper, we illustrate the suggested amendments.
Among positive changes, EACB members noted that according to the revised Guide the criterion for experience can be considered met when an adequate and timely training plan for the appointee is provided by small savings banks and cooperatives. We think this useful possibility should be extended to non-complex institutions (such as regional cooperative banks) in general.
As cooperative banks and networks, we think that the Guide should also anticipate a dedicated treatment for institutions who have a different governance structure (including dual governance systems). The Guide should foresee the proportionate extent of requirements to be applicable to the management body in its executive or supervisory function. Finally, a special treatment for institutions acting as subsidiaries of parent undertakings should be foreseen (proportionate to the level of independency of their management bodies and the complexity of the institution).