August 27, 2020

The revise guide for Fitness and Propriety issued by the Financial Services Commission

Section 20 of the Financial Services Act, 2007 indicates that the determination of fitness and propriety by the Commission includes an assessment of the applicant’s/licensee’s “ability to perform the relevant functions properly, efficiently, honestly and fairly.

 

The Commission issued a guide to Fitness and Propriety on the 5th March 2003. After considering the evolution of the Mauritian Economy and the financial markets in line with international standards, the Commission revised the Guide in June 2020 (the “Guide”).

 

If an applicant/licensee is deemed fit and proper, it means that the latter is competent enough and has the right capabilities to carry out business honestly and correctly.

 

The Guide applies to the applicant/licensee and its connected parties such as shareholders, beneficial owners, directors, officers/employees/associates, representatives, agents and any other related person as determined by the Commission.

 

The Commission uses a cumulative approach in its assessment and in so doing, relies on the following criteria:

 

  • Honesty, integrity, diligence, fairness, reputation and good character;
  • Competence and capability; and
  • Financial soundness.

 

The Guide aims to protect the interests of investors by deterring dishonest, incompetent, unskilled or otherwise inappropriate operators in Mauritius and encourages high standards of conduct within the financial markets of Mauritius.

 

A breach of the Guide may entail the Commission to take serious measures such as direct the licensee to remove the officer who does not satisfy the fit and propriety test.

 

In conducting the test, the Commission shall apply a “balance of probabilities” approach whereby all relevant evidences shall be assessed irrespective of their positive or negative nature including changes in relationships with bankers, custodians, auditors, amongst others.

 

As a concluding note, the Guide provides applicants/licensees with documented direction on the assessment, the approach, the criteria under consideration, the ongoing monitoring mechanisms, the responsibilities of the person under scrutiny and the subsequent impact upon breaches.



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