Not Fit and Proper Directions
The Financial Supervision Commission's powers with respect to "not fit and proper" directions are contained within the Financial Services Act 2008.
Not Fit and Proper Directions
The Commission's General Licensing Policy details the Commission's "fit and proper" person criteria. The fit and proper criteria apply to all licence applicants and licenceholders, as well as persons acting or seeking to act as controller, director, or "key person". "Key persons" are defined in the Financial Services Act 2008 and include individuals with significant powers or responsibilities in a licenceholder. The fit and proper criteria cover integrity, competence and solvency, both on initial licence application or vetting and on a continuous basis.
The Commission may issue a direction to prevent a licence applicant or licenceholder from allowing a person to become or continue as a controller, director, or "key person", if it has reasonable grounds for believing that the person is not fit and proper. Prior to the Commission gaining the power to issue prohibitions, it was obliged to publish the fact of a section 10 direction. The register of "not fit and proper" directions existing at the date of the new prohibition power coming into force may be accessed below.
In terms of Section 10A of the Financial Supervision Act 2008, as amended by the Financial Services (Miscellaneous Amendments) Act 2013, the Commission may impose a prohibition if it appears to it that an individual is not a fit and proper person to perform one or more functions in relation to a regulated activity carried on, or proposed to be carried of by a permitted person. The power is not restricted to individuals who are, or have been "key persons". Such a prohibition may prevent an individual from performing, either in relation to a particular permitted person, a specified class of permitted person, or generally:
- Any function;
- A specified function; or
- A function of a specified class.
Furthermore a prohibition may relate to:
- Any regulated activity;
- A regulated activity specified in the prohibition; or
- A regulated activity of a specified class.
In terms of Section 11B of the Collective Investment Schemes Act 2008, as amended by the Financial Services (Miscellaneous Amendments) Act 2013, the Commission may impose a prohibition, if it appears to it that an individual is not a fit and proper person to be a member of the governing body of a scheme. Such prohibition may prevent an individual from being a member of the governing body of:
- A scheme specified in the prohibition;
- A scheme of a description so specified; or
- Any scheme.
Before imposing any prohibition the Commission must give the person whom it proposes to prohibit an opportunity to make representations in accordance with either Section 10B of the Financial Services Act 2008 or Section11C of the Collective Investment Schemes Act 2008, whichever is appropriate.
The Commission’s Prohibition Policy details the criteria that the Commission will use when deciding whether to impose a prohibition in respect of an individual.
An individual commits an offence if he or she performs, or agrees to perform, a function which he or she is prohibited from performing. A permitted person commits an offence if without reasonable excuse they permit an individual to perform a function which the individual has been prohibited from performing. In relation to prohibitions in terms of Section 11B of the Collective Investment schemes Act 2008, the appointment of an individual in contravention of a prohibition is also invalid for all purposes. A person found guilty of the above mentioned offences is liable:
- On summary conviction to a fine not exceeding £5,000 or to custody for a term not exceeding 6 months, or both;
- On conviction on information to a fine or to custody for a term not exceeding 2 years, or to both.
The Commission is obliged to maintain and publish a list of prohibitions. The list must specify the individual prohibited and the functions or descriptions of functions to which the prohibition applies. The list may be accessed from the search facility at the foot of this page.
On the application of a prohibited person, the Commission may vary or revoke a prohibition. Where such an application is made the Commission must give the prohibited person a statement of its reasons for any decision that it makes.
The Commission also has the power to issue a "warning notice" to a controller, director or key person of a licenceholder or other "permitted" person. A warning notice is a lesser sanction than a "not fit and proper" direction and may be issued instead of or before a "not fit and proper" direction. It is a notice that the Commission has grounds to believe that such activities or circumstances as are specified in the notice are prejudicial to the relevant person's fitness and propriety. Warning notices are not published.
Unlike actions under the Company Officers (Disqualification) Act 2009, "not fit and proper" directions and warning notices are not decided by the Courts.
The Commission's policy is to publish only current "Not Fit and Proper" Directions and Prohibitions.
Search register for existing "Not Fit and Proper" Directions and Prohibitions