Fitness assessment

Persons who determine the policy of an enterprise either solely or jointly or who supervise such policy must be proper and fit for the performance of their tasks. This page describes how the AFM assesses the fitness of candidates.

Division into groups

Fitness consists of knowledge, competences and professional conduct and is described in more detail in the Policy Rule on Fitness 2012. The Policy Rule divides financial enterprises into groups based on criteria such as size, nature, complexity and risk profile.

The following classification applies to enterprises for which the AFM issues a licence:

group A: providers of investment objects and market operators, central securities depositories (CSD)
group B: credit providers, managers of collective investment schemes, investment companies, investment firms (including tied agents), depositaries, data reporting service provider (DRSP), management company of an EuVECA investment fund, crowdfundingserviceprovider, authorized agents and sub agents in insurances
group C: advisers and/or intermediaries, authorised agents and sub-agents, holders of an exemption for intermediation in callable funds (crowdfunding platforms)

What requirements must policymakers in group A meet?

For enterprises in group A, policymakers must demonstrate their fitness in the following four areas

Governance, organisation and communication

This includes the direction of processes, areas of responsibility and employees, compliance and enforcement of generally accepted social, ethical and professional standards, such as timely, correct and clear notification to customers and the supervisor.

Products, services and markets in which the enterprise is active

This includes relevant legislation and regulation and financial (and actuarial) aspects.

Controlled and ethical business conduct

This includes the administrative organisation and internal control, the safeguarding of fitness and professionalism within an enterprise, the treatment of customers with due care, risk management, compliance and the delegation of activities.

Balanced and consistent decision-making

This mainly concerns the interests of customers and other stakeholders.

Sufficient time commitment

Policy makers should be able to commit sufficient time to perform his or her functions and responsibilities.

Collective

The composition and functioning of the entire management board or other relevant corporate body (hereinafter: a ‘collective’) also plays a role in the assessment of the fitness of the individual policymaker. Each individual policymaker must be fit in order to be able to bear joint responsibility. This does not mean that they all have to have the same degree of fitness, but that they must complement each other. A collective may include various areas of specific knowledge and competence. For instance, a CFO must have more specific (financial) knowledge and competences, but a CEO must be fit enough in this area to be able to critically monitor a CFO.

Diversity

The AFM believes that it is important to ensure diversity in the financial sector. Differences in knowledge, experience, age, gender and background provide management boards and supervisory boards with a broad view and new perspectives. This contributes positively to the management of a business as a whole.

The AFM’s assessment procedure expressly takes diversity into account, to ensure that candidates who do not have an explicit financial background or have no experience in the financial sector are also able to successfully pass the initial assessment. After all, in addition to financial knowledge, other expertise and skills are becoming increasingly important in the financial sector. The AFM assesses nominations of this kind based of the following aspects.

The institution is able to motivate which specific expertise candidates are bringing to the board that the board is still lacking.
Candidates have sufficient financial literacy to develop a thorough understanding of the institution and are able to apply this knowledge to their roles.
There is sufficient specific financial knowledge across the supervisory board and the management board as a whole.

The AFM would ask the institution and the candidate to motivate these aspects to the best of their ability, for example by providing a description of the vision and considerations underlying the institution's governance.

What requirements must policymakers in group B meet?

Policymakers of enterprises in group B are considered to be fit if they meet certain minimum requirements, unless there is reasonable cause for a more in-depth assessment. In this case the general requirements as stated for group A may also be included in the assessment.

The schedule Fitness requirements for policymakers at enterprises in group B describes how fitness can be demonstrated prior to taking office.

General requirements

Policymakers at all enterprises – regardless of the group to which they belong – must continue to meet the fitness requirements as stated for group A. If there is cause for a more in-depth assessment, the general requirements as stated for group A will also be included in the assessment.

What requirements must policymakers in group C meet?

Policymakers of enterprises in group C are considered to be fit if they meet certain minimum requirements, unless there is reasonable cause for a more in-depth assessment. In this case the general requirements as stated for group A may also be included in the assessment.

The schedule Fitness requirements for policymakers at enterprises in group C describes how fitness can be demonstrated prior to your taking office.