The Fitness and Proper Test in Full

Every guide on this site references the fit and proper test as the standard every SMF and Certification Regime candidate is assessed against. What we haven’t done anywhere else is break the test down into its actual sub-criteria — the specific, granular questions the FCA’s own guidance directs firms to consider under each of the three headline categories. This is that reference.

Honesty, Integrity and Reputation

This is the category most people associate with “fit and proper,” and it covers considerably more ground than a simple absence of criminal history.

What’s actually assessed

Whether the candidate has been the subject of any criminal proceedings, particularly (but not only) for offences involving dishonesty, fraud, or financial crime. Whether the candidate has been the subject of any adverse civil findings, particularly in relation to financial matters. Whether the candidate has been subject to any disciplinary action by a professional or regulatory body. Whether the candidate has been dismissed, or asked to resign, from any position of trust, and the circumstances involved. Whether the candidate has been candid and truthful in all dealings with regulators, including in the application process itself. Whether the candidate has any history of being refused registration, authorisation or a licence by a regulatory body, in the UK or elsewhere.

The candour point specifically

A candidate’s honesty in the application process itself is treated as a specific, standalone consideration, separate from whatever underlying history is being assessed. A candidate who is forthcoming and transparent about a past issue is generally viewed far more favourably than one who is found to have minimised, omitted or misrepresented something the firm later discovers independently — the concealment itself becomes a fresh integrity concern layered on top of whatever the original issue was.

Competence and Capability

This category is where general seniority is most likely to be mistaken for genuine fitness, and where the sub-criteria reward specificity over impressiveness.

What’s actually assessed

Whether the candidate has the necessary skills and experience to perform the specific function they’re being appointed to — not competence in general, but competence against the particular Statement of Responsibilities they’ll be operating under. Whether the candidate has demonstrated, through their career history, the ability to genuinely fulfil the responsibilities of the role, including through direct examples a reference can verify rather than self-description alone. Whether the candidate has kept their professional knowledge current, particularly in relation to regulatory developments relevant to their function. Whether the candidate has adequate time available to perform the role properly, given any other professional commitments — a genuine consideration for portfolio non-executives and fractional appointments specifically.

Why this is the category most searches under-test

As we discuss throughout our designation guides, “regulated firm experience” is not a single, transferable credential, and the competence and capability limb of the fit and proper test is exactly where that distinction matters most. A candidate can be highly competent in the general sense and still fail this specific limb if their actual experience doesn’t map to the particular accountability the role carries — which is precisely why we build designation-specific assessment into every search rather than screening for general seniority.

Financial Soundness

The least discussed of the three categories, and one that surprises some candidates when it’s raised directly.

What’s actually assessed

Whether the candidate has been subject to any judgment debts or awards that remain outstanding, or that were paid only after enforcement action. Whether the candidate has made any arrangements with creditors, including individual voluntary arrangements. Whether the candidate has been adjudged bankrupt, and if so, the circumstances and whether the bankruptcy has been discharged. Whether the candidate has been subject to a company insolvency, particularly where their conduct as a director contributed to it.

Why this category exists

The underlying concern isn’t that personal financial difficulty makes someone untrustworthy in a moral sense — it’s that certain kinds of financial history can indicate a level of financial management or judgement that’s directly relevant to roles carrying financial oversight responsibility, and can, in some circumstances, create a vulnerability to financial pressure or inducement that a firm needs to weigh honestly. A single historical financial difficulty, properly explained and resolved, is treated very differently from a pattern of financial mismanagement, or from an issue that remains unresolved and ongoing.

How the Three Categories Interact

The FCA’s own guidance is explicit that these three categories aren’t assessed in isolation, or given fixed, mechanical weighting — a firm is expected to reach an overall judgement, considering the seriousness of any adverse finding, how long ago it occurred, whether it’s part of a pattern, and what the individual has done since to address it. This means the test rewards a genuinely thoughtful, evidenced overall assessment far more than a checklist approach that treats each category as a simple pass or fail with no room for context or explanation.

What This Means for How a Search Should Actually Run

Building the fit and proper test into a search means testing for all three categories directly and specifically throughout the process — not simply running a background check at the end and hoping nothing surfaces. Reference conversations that probe honesty and integrity through specific past scenarios, competence assessment that tests against the actual Statement of Responsibilities rather than general seniority, and a straightforward, judgement-free conversation with candidates about financial soundness where it’s genuinely relevant to the role — this is what turns the fit and proper test from a final compliance hurdle into the actual organising structure of a well-run SMF search.