On 21 March 2018, the European Securities and Markets Authority and the European Banking Authority published final joint Guidelines on the assessment of the suitability of members of the management body and key function holders. The Guidelines will apply from 30 June 2018, and competent authorities have until 21 May 2018 to notify the EBA and ESMA as to whether they comply or intend to comply.

MiFID2 directly extends CRD IV’s requirements for governance arrangements and the management body of an investment firm (Articles 88 and 91 of Directive 2013/36/EU). MiFID2 and CRD IV provide a joint mandate to the EBA and ESMA to develop these guidelines on the assessment of suitability of members of the management body. Entities subject to CRD IV also have to assess the suitability of all key function holders that have a significant influence over the direction of the institution. Competent authorities will be required to assess all members of the management body and for significant institutions the heads of internal control functions.

In the UK, we understand that the FCA is generally of the view that these guidelines are complementary to, and certainly do not undermine, the incoming extended Senior Managers and Certification Regime. The Guidelines also apply proportionately, based on a firm’s size, nature, location, complexity, legal form, activities, types of clients, etc. If members have any questions, please contact Adele Rentsch or Adam Jacobs-Dean.