The CBI issued a letter to the management of all Regulated Financial Service Providers (RFSPs) setting its expectations following significant issues in Fitness and Probity (F&P) compliance identified by thematic inspections of the insurance and banking sector. The CBI is concerned to observe that a number of RFSPs not take any action following its 2019 letter to perform a formal “gap analysis” of their policies, processes and procedures. The CBI finds that: “it is wholly unacceptable that such shortcomings continue to exist in circumstances where the F&P regime was introduced almost 10 years ago”. The CBI expects all RFSPs to take appropriate action to address the significant issues outlined in this letter and to be able to evidence such action if requested.
Key issues include:
- board awareness of Fitness and Probity obligations
- lack of due diligence on incoming staff
- failure to assess outsourced providers when outsourcing controlled functions
- absence of processes to identify, escalate and notify the CBI about F&P concerns
- lack of compliance testing for F&P processes and procedures
Fund management companies, SMICs and externally managed funds, as well as other RFSPs, need to review their compliance with the findings and observations and, where necessary, take steps to remediate any identified issues or weaknesses in their compliance with F&P requirements.
