Answers to the European Commission on the ... - Eiopa - Europa

management of an undertaking as <strong>the</strong> executive direc<strong>to</strong>rs. As such,
<strong>the</strong>y should not be required <strong>to</strong> meet <strong>the</strong> same fit and proper criteria.
Never<strong>the</strong>less, CEIOPS is of <strong>the</strong> opinion that members of <strong>the</strong>
supervisory board/non-executive direc<strong>to</strong>rs should fulfil at least
propriety requirements.
16.17 The fit and proper requirements should apply <strong>to</strong> all insurance
undertakings. A person running a small undertaking, however, does not
need <strong>the</strong> same level of expertise as a person running a much bigger
one in order <strong>to</strong> be able <strong>to</strong> execute his duties adequately. So, <strong>the</strong> fitness
requirement should allow for some flexibility regarding <strong>the</strong> appropriate
level of expertise. This could be achieved by defining a rule that allows
for exceptions, as opposed <strong>to</strong> a hard-and-fast rule relating <strong>to</strong> <strong>the</strong>
conditions that generally indicate fulfilment of <strong>the</strong> fitness requirement
(on level 2 or through supervisory guidance). This would promote
convergence in supervisory practice and still permit supervisory
authorities <strong>to</strong> accept deviations from <strong>the</strong> rule in justified cases, <strong>the</strong>reby
taking individual cases sufficiently in<strong>to</strong> account.
16.18 'Proper' is defined as being reliable and respectable. The following
indica<strong>to</strong>rs could help <strong>to</strong> identify areas which should be examined:
• indica<strong>to</strong>rs relating <strong>to</strong> involvement in criminal conduct;
• financial indica<strong>to</strong>rs that provide information on possible financial
misconduct, improper conduct in decision-taking, in financial
accounting or negligence;
• supervisory indica<strong>to</strong>rs that provide information collected by
supervisors in <strong>the</strong> course of <strong>the</strong>ir supervisory duties. This includes
information also from o<strong>the</strong>r financial sec<strong>to</strong>rs. Many Member
States have legislation in place <strong>to</strong> protect <strong>the</strong> privacy of
individuals. CEIOPS recognises that <strong>the</strong>re may be limitations <strong>to</strong> a
free exchange of information between supervisors or <strong>to</strong> <strong>the</strong>
ga<strong>the</strong>ring of such information;
• <strong>the</strong>re may also be o<strong>the</strong>r indica<strong>to</strong>rs in a principles-based system
that can provide information relevant <strong>to</strong> <strong>the</strong> propriety of <strong>the</strong>
individual.
16.19 Where, for instance, <strong>the</strong>re are records or evidence of an individual’s
previous business conduct or activities that suggest he/she was
engaged in business practices that were actually deceitful or o<strong>the</strong>rwise
improper, or which o<strong>the</strong>rwise shed a negative light on <strong>the</strong> individual’s
business methods, this information can also be taken in<strong>to</strong> account,
when making <strong>the</strong> overall assessment. CEIOPS recognises that in some
countries <strong>the</strong> legal system requires more formal and prescribed
grounds for not being fit and proper.
16.20 According <strong>to</strong> <strong>the</strong> wording in <strong>the</strong> current legislation, <strong>the</strong> Board of
Direc<strong>to</strong>rs and Senior Management must fulfil fit and proper criteria
before an undertaking is granted a licence. Supervisors’ fit and proper
assessment should not be limited <strong>to</strong> <strong>the</strong> licensing procedure but should
also be carried out in a similar fashion if an undertaking wishes <strong>to</strong>
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