Response to consultation on Regulatory Technical Standards to specify the minimum content of the suitability questionnaire, curriculum vitae and internal suitability assessment
Question 1: Are the draft RTS appropriate and sufficiently clear?
The draft RTS are generally appropriate in their objective to harmonise the minimum content of the information to be submitted for suitability assessments. However, certain provisions should be further clarified to ensure that the requirements remain proportionate and practicable, in particular for internationally active banking groups operating in Germany whose parent undertaking is located outside Germany.
Proposal 1: Article 5(3)(a) – Limitation of criminal records to a five-year reference period
Article 5(3)(a) of the draft RTS should be amended as follows:
“Criminal records, considering periods of limitation in force in the national law, including, where available, from countries where the individual is a citizen, is resident or works, or has been a citizen or been resident or has worked within the last 10 years 5 years, or other equivalent document according to national law. Competent authorities may, on a risk-based and duly justified basis, request criminal records or equivalent documents covering a longer period where this is necessary and proportionate for the assessment of the individual’s reputation, honesty and integrity. Where such records or equivalent documents are not available, not comparable or can only be obtained or verified with disproportionate effort, competent authorities may accept other reliable evidence.”
Reasoning:
Article 5(3)(a) currently provides for a ten-year reference period for criminal records or equivalent documents. This appears too broad as a general rule, in particular for internationally active banking groups where individuals may have worked, resided or held citizenship in several jurisdictions.
A five-year reference period would be more proportionate as a default rule. It would normally cover the period most relevant for assessing reputation, honesty and integrity, while avoiding a disproportionate documentation burden. This is particularly important where several jurisdictions are involved and where the practical effort of obtaining criminal records or equivalent documents may be significant.
The supervisory objective would remain fully preserved. Competent authorities could still request documents covering a longer period where this is necessary, proportionate and justified on a risk-based basis. The proposed amendment would therefore not prevent competent authorities from taking into account older information in cases where specific circumstances indicate that such information is relevant.
The proposed wording would also provide necessary flexibility where criminal records or equivalent documents are not available, not comparable or can only be obtained or verified with disproportionate effort. This is especially relevant in cross-border or third-country situations, where register systems, disclosure rules, administrative practices and processing times may differ significantly.
Allowing competent authorities to accept other reliable evidence in such cases would avoid unnecessary delays and administrative burden. At the same time, it would ensure that institutions are not made responsible for circumstances outside their control, while the suitability assessment can still be based on appropriate and reliable information.
Proposal 2: Article 4(2) – Flexibility regarding the six-month period for training plans
Article 4(2) should be amended as follows:
“ Where non-material weaknesses are identified by the entity regarding the suitability of an individual, the assessment shall be accompanied by any mitigating measures decided on to address these weaknesses, including where applicable, the content, timeline and duration of a training plan to ensure that the individual meets fully the suitability criteria, within a maximum time period of six months after their appointment, unless a longer period is justified by the nature of the non-material weakness, the complexity of the function, the individual’s previous experience or the specific circumstances.”
Reasoning:
Article 4(2) provides that where non-material weaknesses are identified, the assessment must be accompanied by mitigating measures, including, where applicable, a training plan ensuring that the individual fully meets the suitability criteria within a maximum period of six months after appointment.
The objective of addressing identified weaknesses in a timely manner is appropriate. However, a strict six-month maximum period may not be suitable in all cases. Since Article 4(2) only concerns non-material weaknesses, the timeframe for addressing such weaknesses should allow for a proportionate and risk-based assessment.
The appropriate timeframe may depend on the nature of the non-material weakness, the complexity of the function, the individual’s previous experience and other specific circumstances. For example, an individual may be generally suitable for the position but may require additional familiarisation with certain local regulatory, governance or reporting requirements. In such cases, a rigid six-month deadline may be unnecessarily restrictive, even though the identified weakness does not prevent the individual from performing the function.
The entity should remain required to identify the weakness, define suitable mitigating measures, set out the content, timeline and duration of the training plan and monitor its implementation. The proposed clarification would therefore not weaken the suitability assessment. It would merely allow the timeframe to be calibrated to the circumstances of the individual case.
A more flexible approach would avoid unnecessary restrictions on the appointment of otherwise suitable candidates while preserving the supervisory objective of ensuring that identified weaknesses are addressed in a structured and timely manner.