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As of 5 February 2025, the Danish Financial Supervisory Authority (Danish FSA) has updated the guidance on its practice for suitability assessments of senior executives in financial sector companies.
At least annually, the Danish FSA publishes the "suitability report". The purpose of the report is to provide insight into the Danish FSA practice when assessing whether a candidate for a directorship or other key position is considered suitable by the Danish FSA for a proposed position in a financial sector company. The report provides a number of recent examples of completed assessments, which include the candidates' knowledge, professional competence and experience in relation to a specific position.
The suitability report was first published in 2024 and has now been updated with information about a number of cases that the Danish FSA has processed.
An Assessment of the Candidate's Overall Background
The report describes the Danish FSA's practice in a number of anonymised decisions that address the question of what adequately meets the suitability requirement. In all cases, the applicants have been approved, but specific assessments have been made of, among other things, the candidate's professional and managerial competences.
It is expected that insight into the Danish FSA's practice for positive suitability assessments may help companies in the financial sector to expand their recruitment base.
The description of the practice and decisions shows how the Danish FSA approaches the assessment of a candidate's suitability based on a holistic approach that includes other relevant education and experience, such as experience outside the financial sector. For example, a candidate seeking to become a compliance officer may have experience from another control function in a different area than the one they are applying for. Here, the Danish FSA may consider that the candidate may have learnt a methodology and gained knowledge of controls that are also relevant to the new position.
Suitability assessments form the 'fit' part of 'fit & proper' assessments. The 'proper' part includes the candidate's propriety and honesty.
Our View
The recent annual update from the Danish FSA regarding its practice as to fit and proper assessments is a positive development as it increases regulatory transparency for the financial sector. By outlining its assessment criteria and providing real-world examples, the Danish FSA allows financial institutions to better understand and anticipate its expectations and to make better informed hiring decisions. Moreover, the Danish FSA's increasing emphasis on a holistic assessment, which considers experience adjacent to the traditional financial sector, proposes and permits continued professional education and training, does at least on the face of it suggest that there is a development towards an increased willingness to widen the potential pool of talent outside the hitherto very narrow group of candidates, potentially bringing in more diverse perspectives and skillsets. The actual effects are to be seen in due course. By understanding what the Danish FSA considers relevant experience, companies can refine their search criteria and target candidates who might not have been considered previously. It goes without saying, that the continued focus on professional and managerial competencies is essential for ensuring the stability and soundness of the financial system. The annual updates on practice shows the Danish FSA's continuing commitment to improve and respond to the evolving financial sector.
Guidance from DFSA
The full report is available on the DFSA's website and is included below in the Danish original:
Further Information
For more information on banking and financial regulation law for banking or capital markets transactions in Denmark, please contact Dr. Andreas Tamasauskas or Michael Carsted Rosenberg at Carsted Rosenberg.
This briefing is intended to provide general information on financial regulation in Denmark It is not intended to provide definitive legal or tax advice. No legal, tax or business decisions should be based solely on its content. The briefing does not necessarily deal with every important topic and is not designed to provide legal or other advice. It shall not be used as a substitute for legal advice and none may be inferred. It is only intended for general information on matters of interest. While we endeavour to represent the information as accurately and correctly as possible, we cannot accept any responsibility for any errors or omissions.