Description
Prof. Heinrich Winter (University of Groningen) addressed the fit and proper test for board members of financial institutions. He identified a number of controversial issues regarding it: How to implement the fit and proper test? In particular, how to operationalize broadly formulated concepts, like ‘fit’ and ‘proper’? How does this test relate to boardroom observation? What about the balance of power between regulators and financial institutions? What about legal protection of individuals? What about self-controls within financial institutions and the ability of the sector to put its own house in order? Is the fit and proper test the most suitable strategy to improve the quality of governance in financial institutions? And who controls the controllers? More specifically, his research focuses on the functioning of the test. The issues in question include, among others, whether the evaluation process is in conformity with the basic standards of equality of arms and fair balance, how the regulated persons experience it, and what lessons can be learned from other regulated sectors and European jurisdictions. In the opinion of Winter, in a few years the fit and proper test is likely to be adopted in many sectors of our economy. The importance of providing answers to the above questions can therefore not be underestimated. In his presentation, he focused on the lessons from the Dutch housing sector where the fit and proper test has been applied since July 2015. His recent empirical study of the experiences of the board members of housing corporations (‘wonigcorporaties’) with this test has produced mixed results. In particular, while around 50% of the respondents found the test to be an effective instrument for assessing their qualities, around 30% did not share this view. Moreover, compared to other instruments in place (such as lifelong learning, governance codes, internal evaluations and external reviews), the respondents considered the fit and proper test to be least appropriate. These findings with respect to the housing sector mirror resistance towards the fit and proper test that can also observed in the financial sector.| Period | 30-Sept-2016 |
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| Event title | Inaugural International Conference ‘Towards Sustainable Financial Services in the EU: Making Sense of the Trend’ |
| Event type | Conference |
| Organiser | Groningen Centre for European Financial Services Law (GCEFSL) |
| Location | Amsterdam, NetherlandsShow on map |