Central Bank Publishes Thematic Assessment Report on the Fitness and Probity Regime for MiFID Investment Firms

The Central Bank has published a thematic assessment report (the “Report“) following a review of the implementation of key aspects of the Fitness and Probity regime (the “F&P Regime“) in the MiFID investment firm sector. The Report examines the Central Bank’s supervisory expectations and findings in relation to the F&P Regime, the Individual Accountability Framework (“IAF“) and, where relevant, the Senior Executive Accountability Regime (“SEAR“).

Key Findings

The Report found that while many firms had sufficiently detailed F&P policies and procedures in place, a number of firms displayed deficiencies, particularly in the due diligence undertaken at the on-boarding stage and as part of the annual certification process for Pre-Approved Controlled Function (“PCF“) role holders.

In relation to the IAF and SEAR, the Central Bank noted that while the majority of firms have taken effective steps to embed these frameworks, further work is required by some firms to reach the expected level of maturity.

Supervisory Expectations

The Report identifies both good practices and areas requiring enhancement across three key themes:

• Policies and Procedures: Many firms maintained up-to-date and detailed F&P policies. However, some firms did not effectively apply requirements in practice, with policies lacking sufficient detail on how Controlled Function and PCF role holders would meet the Fitness and Probity Standards. Certain firms’ policy documents also lacked specifics on how the IAF had been tailored and embedded.
• Due Diligence and Annual Certification: Some firms were unable to provide sufficient evidence of due diligence at the on-boarding stage or for the annual certification process. Common gaps included missing signed agreements to comply with the F&P Standards and insufficient documentation of competence and capability assessments.
• IAF and SEAR: While the majority of firms had updated policies and delivered staff training, the Central Bank found that certain firms’ policies did not adequately reflect the IAF or document how the framework had been tailored in practice.

Recommended Actions

The Central Bank expects all MiFID investment firms to review their arrangements, practices, policies and procedures against the Report’s findings. Given that the Report arose directly from a thematic review of this sector, firms should treat the findings as a direct call to action and prioritise a comprehensive assessment of their F&P, IAF and, where relevant, SEAR frameworks to ensure alignment with supervisory expectations.

Firms should consider bringing the Report to the attention of the board at its next meeting, for example, as part of the compliance update, and ensure it is noted on the agenda and in the minutes.