Fit and Proper Test

A fit and proper test is the assessment a supervisor applies to the people who own, control or run a regulated firm, as opposed to the product the firm sells. It typically examines three things: honesty and reputation, drawing on criminal records, past regulatory findings and any history of dishonesty; competence and experience appropriate to the role; and financial soundness. What this means for a customer is what an authorisation therefore implies. Someone official has checked the identities and histories of named individuals standing behind the legal entity, and those individuals can be barred from holding such a role again — a consequence that does not exist for an unregulated business. It implies nothing about the business model working or the firm remaining solvent. Which roles are in scope, what the criteria are, and whether the assessment is one-off or continuing differ by jurisdiction.