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The Danish Financial Supervisory Authority (Danish FSA) has published a guidance note on its practices and considerations in relation to so-called 'fit & proper' assessments. The practice guidance aims to provide transparency in an area where the Danish FSA takes some of its most intrusive decisions.
Financial regulation requires, among other things, that the senior management in financial institutions (including board members, directors and key employees) be of good repute. The Danish FSA sets a high standard with regard to the fit & proper test of directors of financial firms and institutions.
Financial firms make their own initial assessment of the suitability of their prospective directors. However, the Danish FSA has a supervisory role and can order a firm to remove a director or key employee or order a director to resign if he or she no longer meets the fit & proper requirement.
It is always a case-by-case assessment whether or not a person can be considered fit & proper under financial legislation. The Danish FSA takes the position, that It is not possible to provide general guidelines for this assessment. Over the years, the Board of the Danish FSA has dealt with a number of cases concerning the good repute of directors in relation to their duties in the financial sector. In these cases, the FSA board has discussed both the interpretation of the regulatory framework and its relationship with other legislation, such as tort and criminal law, the process, the relationship with other authorities dealing with the same issues, for example in litigation, and in particular, the parameters to be taken into account when applying the fit & proper test on a director.
The FSA's reflections and considerations in these cases are set out in this note in order to increase transparency and understanding of the FSA's interpretation of the rules and the underlying considerations. While the guidance is currently only available in Danish, we have published a an automatic translation of the practice guidance. While the automated English translation is for reference only, the Danish original sets out the current position of the Danish FSA in relation to the application of the fit & proper test in Denmark.
The automatically translated version is available here:
The Danish original is available here:
For further information, please reach out to Andreas Tamasauskas or Michael Rosenberg at Carsted Rosenberg.