FCA Fit and Proper Test: A Guide for Firms and Senior Personnel

Question	Practical answer
What are the main criteria?	Honesty, integrity, and reputation; competence and capability; and financial soundness
Who is principally assessed?	Senior Managers and Certification Staff, alongside other individuals subject to applicable suitability requirements
When does assessment occur?	Before appointment or certification, on an ongoing basis, and at least annually for relevant SM&CR staff
Who assesses Certification Staff?	The employing firm, rather than the FCA
Is the test role-specific?	Evidence must be assessed against the responsibilities and risks of the particular function
Does one concern automatically make someone unfit?	Firms should assess seriousness, relevance, reliability, context, remediation, and the individual’s response
What happens if the standard is not met?	The firm must not issue or renew certification and may need to restrict duties, investigate, notify regulators, or update references

What is the FCA Fit and Proper test?

The Fit and Proper test is the FCA framework for assessing whether an individual has the character, competence, capability, and financial circumstances required for a particular role in financial services.

The framework is set out in the FCA Handbook sourcebook FIT: Fit and Proper Test for Employees and Senior Personnel. It supports the Senior Managers and Certification Regime by requiring firms to assess people whose decisions or conduct can create significant risk for customers, markets, or the firm.

The assessment is role-specific. Evidence carries different weight depending on the individual’s responsibilities, authority, customers, markets, and ability to cause harm. Conduct outside day-to-day duties may still matter where it demonstrates dishonesty, poor judgment, or an inability to meet the role’s standards.

For the wider accountability framework, see The Senior Managers and Certification Regime Explained.

Who must be assessed as fit and proper?

Senior Managers and Certification Staff are the principal groups assessed under SM&CR.

Senior Managers perform functions requiring FCA or PRA approval. The firm must satisfy itself that the candidate is fit and proper before applying, and its responsibility continues after approval.

Certification Staff perform functions capable of causing significant harm but are not approved directly by the FCA. Their employer must assess and certify them before they perform the function.

The FCA’s Certification Regime guidance explains that firms must assess relevant employees on appointment, on an ongoing basis, and at least annually.

Fitness and propriety may also affect other controlled functions, non-executive directors, appointed representatives, promotions, and sector-specific roles. Firms should maintain a current in-scope population as responsibilities, entities, and permissions change.

What are the three Fit and Proper criteria?

FIT 1.3 identifies three principal considerations. They are related, but firms should assess each one separately before reaching an overall, role-specific conclusion.

Criterion	Central question	Examples of relevant evidence
Honesty, integrity, and reputation	Can the individual be trusted to act truthfully, ethically, and consistently with regulatory expectations?	Conduct findings, disclosures, regulatory history, disciplinary matters, communications, and evidence of remediation
Competence and capability	Does the person have the knowledge, skill, experience, judgment, health, time, and practical ability to perform the role?	Qualifications, performance, training, experience, supervision, decision-making, and capacity
Financial soundness	Do the person’s financial circumstances create a material concern about their ability to perform the role appropriately?	Insolvency, judgments, creditor arrangements, financial pressure, disclosure, and responsible management of obligations

No formula determines the outcome. The assessment requires proportionate judgment, reliable evidence, and a clear explanation of how each concern relates to the function.

What do honesty, integrity, and reputation mean?

Honesty concerns truthfulness and whether a person has misled, deceived, concealed, or failed to disclose important information.

Integrity is broader. It includes adherence to appropriate ethical standards, consistency between words and actions, sound judgment, and willingness to act properly when doing so is difficult or commercially inconvenient.

Reputation concerns whether reliable information could reasonably undermine confidence in the individual’s suitability. It is not simply a media or public-relations test.

FIT 2.1 identifies considerations including criminal, civil, regulatory, professional, and disciplinary matters; previous dealings with regulators; dismissal connected to misconduct; and whether the person has been candid and truthful.

A conviction or adverse finding does not automatically make someone unfit. The firm should consider seriousness, relevance, circumstances, recency, explanation, and rehabilitation. Equally, the absence of a conviction does not make conduct irrelevant to a regulatory or employment assessment.

What do competence and capability mean?

Competence and capability concern whether the individual can perform the role effectively in practice.

Relevant evidence can include qualifications, technical knowledge, industry experience, training, continuing professional development, previous performance, decision-making, supervision, delegation, and understanding of the firm’s customers, products, systems, and risks.

The assessment should also consider time, capacity, judgment, and the ability to identify and escalate problems.

FIT 2.2 provides the principal FCA criteria. A firm should not rely only on length of service or possession of a qualification. It should assess whether the person can apply their knowledge to the actual responsibilities involved.

Some gaps may be addressed through training, mentoring, supervision, or a development plan, but only where the firm can still conclude that the person is currently able to perform the role safely.

What does financial soundness mean?

Financial soundness asks whether an individual’s financial circumstances create a material concern about their suitability.

FIT 2.3 refers to matters such as judgment debts, bankruptcy, arrangements with creditors, and whether the person has managed financial obligations satisfactorily.

Limited wealth or a past period of financial difficulty does not by itself make someone unfit. The assessment should focus on the circumstances, their relevance to the role, whether the matter was disclosed, how the individual responded, and whether financial pressure creates a conflict, vulnerability, or misconduct risk.

A resolved and candidly disclosed issue may carry less weight than continuing undisclosed debt accompanied by dishonesty or poor judgment. Checks should remain proportionate and lawful rather than becoming an indiscriminate examination of an employee’s private finances.

When should firms conduct or revisit an assessment?

Assessment begins before appointment, approval, or certification and continues throughout the individual’s time in the role.

For Certification Staff, the firm must be satisfied that the person is fit and proper before issuing a certificate and must reassess at least annually. Senior Managers also require ongoing firm assessment after regulatory approval.

The annual review is a minimum, not a safe harbor. A firm should reassess promptly when new information could materially affect suitability.

Trigger events can include a Conduct Rule breach, disciplinary finding, criminal or regulatory proceeding, serious complaint, material performance concern, new regulatory reference, change in responsibilities, conflict of interest, relevant financial difficulty, or credible allegation of serious misconduct.

The FCA’s Certification Regime guidance should support the timing and governance of the review. Firms should not allow certification to renew automatically while a material concern remains unresolved.

What evidence should firms consider?

A defensible assessment draws information from the functions that hold it rather than relying solely on an annual employee declaration.

Relevant evidence may include employment and application information, regulatory references, qualifications, training records, performance reviews, Statements of Responsibilities, complaints, disciplinary findings, investigations, conflicts, outside business interests, financial checks where lawful and relevant, and communications connected to a conduct concern.

The firm should distinguish facts, formal findings, credible unresolved allegations, disputed information, opinion, and irrelevant material. Subject to legal and investigative constraints, the individual should normally be able to respond.

The record should show what evidence was reviewed, the weight given to it, and why.

What role do regulatory references play?

Regulatory references help prevent material conduct and competence concerns from disappearing when an individual changes employer.

For relevant Senior Manager and Certification appointments, firms generally request references covering the previous six years. The providing firm may need to disclose prescribed information, including relevant findings that the person was not fit and proper or breached applicable Conduct Rules.

The current FCA template and disclosure requirements appear in SYSC 22 Annex 1. A reference may also need to be updated where the former employer later discovers significant information that would have changed it.

References should be accurate, fair, supported by documented findings, and handled through appropriate governance. A receiving firm should not apply the information mechanically. It should consider the role, seriousness, recency, remediation, and relevance to the proposed function.

How should firms assess adverse findings and allegations?

An allegation is not the same as a finding, but it may still require proportionate assessment.

The firm should consider credibility, specificity, evidence quality, any formal finding, the individual’s response, and the connection to the role. Seriousness, recency, repetition, and remediation matter; trivial, implausible, or irrelevant allegations should not determine the outcome.

A practical decision record should explain what information was received, what verification was undertaken, what findings were reached, how the matter affected each FIT criterion, and why the individual was found fit, unfit, or fit with proportionate controls.

Global Relay’s analysis of the FCA’s decision to ban Crispin Odey illustrates how the regulator may assess integrity, candor, and evidence across a long-running conduct matter. See FCA stance clear as Crispin Odey banned.

How does the Fit and Proper test relate to the Conduct Rules?

FIT and the FCA Conduct Rules perform connected but different functions.

The Conduct Rules assess whether particular behavior breached a regulatory standard. FIT asks whether the individual remains suitable to perform a specific role after all relevant evidence is considered.

A Conduct Rule breach may affect honesty, integrity, reputation, competence, certification, regulatory references, or continued Senior Manager approval. It does not automatically mean that the person is unfit.

The firm should consider seriousness, repetition, seniority, responsibility, harm, remediation, and the individual’s wider record. Conduct can also be relevant to FIT even where it falls outside COCON or no formal Conduct Rule breach is established.

The assessments should therefore be documented separately but connected through a common evidence and governance process.

For the detailed conduct framework, see FCA conduct rules and COCON explained. The official rules are contained in the FCA Handbook sourcebook COCON.

How does non-financial misconduct affect fitness and propriety?

Serious non-financial misconduct can be relevant to honesty, integrity, and reputation where it has a meaningful bearing on regulatory suitability.

Potentially relevant conduct can include bullying, harassment, violence, discrimination, abuse of authority, retaliation against people who raise concerns, serious dishonesty, or misconduct through social media.

The assessment should remain evidence-based and role-specific. Firms should consider seriousness, reliability, context, the connection to work or regulatory responsibilities, and the person’s response. They are not expected to monitor employees’ private lives or social-media accounts routinely.

As of July 31, 2026, FCA guidance scheduled to take effect on September 1, 2026 will clarify how firms should consider work-related and private-life misconduct, social-media activity, unproven allegations, privacy, and proportionality. The FCA Handbook currently provides a future version of FIT for that date. The article must be reviewed if it is published on or after September 1, 2026.

For the wider conduct-and-culture framework, see non-financial misconduct in financial services.

See also Non-financial misconduct rules extending to SM&CR firms and the 10-step NFM implementation checklist.

How should firms document and complete the annual assessment?

A strong process combines standardized governance with individual, role-specific judgment.

A practical annual assessment normally has six stages:

1. Confirm the role. Establish the individual’s current function, responsibilities, authority, and changes to the firm’s business or risk profile.
2. Review the evidence. Assess competence, performance, conduct, declarations, references, conflicts, and investigations against each FIT criterion.
3. Resolve concerns. Identify new or unresolved information and give the individual an appropriate opportunity to respond.
4. Reach a conclusion. Decide whether the person is fit, unfit, or fit subject to proportionate controls that do not conceal a fundamental deficiency.
5. Escalate consequences. Address unresolved concerns before approval or certification is renewed and consider reference or regulatory-notification implications.
6. Document the decision. Record the reasoning, decision-makers, conditions, next review date, and evidence supporting the outcome.

The previous conclusion should not be carried forward automatically. The firm should consider changes in responsibilities, performance, training, conduct, capacity, finances, and the operating environment.

Where controls are imposed, the record should explain why the person remains suitable, who owns the control, and what triggers escalation.

What happens if an individual is no longer fit and proper?

Where a firm concludes that an individual no longer meets the required standard, it should act promptly and fairly.

For Certification Staff, the firm must not issue or renew a certificate and should prevent the person from performing the Certification Function without valid certification.

Depending on the circumstances, the firm may restrict duties, suspend or discipline the person, update a regulatory reference, preserve evidence, assess harm, and notify the FCA or PRA.

Senior Manager cases may also affect approval, Statements of Responsibilities, succession arrangements, and regulatory engagement.

The decision can have significant career consequences. Governance should include reliable evidence, appropriate independence, legal and employment review, and a fair opportunity for the person to respond.

What are common assessment weaknesses?

A weak process treats FIT as an annual form-filling exercise rather than an ongoing regulatory judgment.

Common failures include generic assessments, excessive reliance on self-declarations, poor information sharing, delayed reassessment, inadequate competence evidence, weak reference governance, inconsistent decisions, and renewal before material issues are resolved.

Firms may also ignore credible concerns because no conviction exists or treat every allegation as proven.

The quality of the outcome depends on whether the firm can bring reliable evidence together, distinguish different types of information, and explain its judgment consistently.

Frequently asked questions

What are the three Fit and Proper criteria?

They are honesty, integrity, and reputation; competence and capability; and financial soundness.

Who assesses Certification Staff?

Their employing firm assesses and certifies them. They are not approved directly by the FCA.

How often must assessments take place?

Relevant individuals must be assessed before appointment or certification, on an ongoing basis, and at least annually.

Does a conviction automatically make someone unfit?

The firm or regulator should consider seriousness, relevance, circumstances, recency, explanation, and rehabilitation.

Can an allegation affect an assessment?

Yes, where it is credible, relevant, and sufficiently supported. It should not automatically be treated as an established fact.

Does a Conduct Rule breach automatically make someone unfit?

It is relevant evidence, but FIT requires a separate and proportionate role-specific assessment.

Can private-life conduct be relevant?

Yes, where serious conduct has a meaningful bearing on honesty, integrity, reputation, or suitability. Firms are not expected to monitor private life routinely.

What happens when Certification Staff are not fit and proper?

The firm must not issue or renew their certificate and must prevent them from performing the Certification Function.

How Global Relay helps

Fitness and propriety decisions can depend on reliable evidence of what an individual communicated, knew, escalated, and decided.

Global Relay captures and preserves business communications across email, mobile, voice, financial messaging, collaboration platforms, and other channels.

This communications record can support appropriately governed conduct investigations, annual certification reviews, regulatory-reference decisions, and responses to regulatory enquiries.

Global Relay Communications Surveillance can also help identify potential conduct, culture, and compliance risks for proportionate human review.

Learn more about Global Relay Communications Surveillance and Global Relay Archive.

Related reading:

• The Senior Managers and Certification Regime Explained
• FCA Conduct Rules and COCON Explained
• Non-Financial Misconduct in Financial Services
• Non-financial misconduct rules extending to SM&CR firms
• Checklist: 10 steps to meet the NFM-rule deadline
• FCA stance clear as Crispin Odey banned