Joint EBA – ESMA Guidelines to assess the suitability of members of management bodies and key function holders

The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have published their joint guidelines to assess the suitability of members of management bodies and key function holders. The Guidelines emphasise the importance for institutions to take into consideration whether candidates have the knowledge, qualifications and expertise necessary to ensure proper and sound management of the institution and aim to promote more diverse management bodies to improve risk oversight and resilience of institutions.

In particular, the Guidelines set forth the notions of:

• sufficient time commitment;
• adequate collective knowledge, skills and experience;
• honesty, integrity and independence of mind;
• adequate human and financial resources for preparing and training members of the management body; and
• diversity, which is to be considered in the selection process.

In particular, the members of the management body should have sufficient time to address all the necessary topics in depth, in particular the establishment of business and risk strategies and the management of the main risks. Moreover, the management body should collectively possess adequate knowledge, skills and experience to understand the institution’s activities, including the main risks.

These guidelines will apply as of 30 June 2018; on that date, the previous EBA guidelines of 22 November 2012 will no longer apply.

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