Fit and proper requirements
Prudential requirements bearing on the persons who effectively run the undertaking or hold a key function, assessed at appointment and then on an ongoing basis by the supervisor.
Capital decides nothing; people decide. Solvency II draws the consequence by subjecting anyone who effectively runs the undertaking or holds a key function to a double test. Competence is assessed collectively as much as individually: the administrative body must jointly cover markets, strategy, business model, governance system, financial and actuarial analysis, and the regulatory framework, which rules out a board of identical profiles however excellent. Propriety is assessed individually, on absence of conviction, integrity and financial soundness. Two features make this more than a formality. Assessment is ongoing rather than one-off: a director fit at appointment ceases to be so if circumstances change, and the undertaking must notify it. And the supervisor holds a power of objection that can reach suspension or removal, which gives prior notification its real weight. The distribution directive extends a comparable, lighter requirement to the people who sell.
Article 42 of Directive 2009/138/EC. In France, every appointment of an effective director or key function holder is notified to the ACPR with an individual file, and the authority has a window in which to object. Collective competence is where inspections most often find fault: a board of seven finance professionals, with no actuarial or technology competence at all, fails the collective test even if each member passes the individual one.
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