Section 20 of the Financial Services Act 2007 (FSA) lists the criteria that the Commission may have to regard when considering whether a person is a “fit and proper person” and these include their “ability to perform the relevant functions properly, efficiently, honestly and fairly” and their “reputation, character, financial integrity and reliability”.
Being “fit and proper” means an applicant and/or licensee is, on the balance of probabilities, competent and capable of carrying out business in a manner that is both honest and correct.
Application of the Guide
The Guide is applicable to the following non-exhaustive list of persons:
- any shareholder of the applicant and/or licensee;
- any beneficial owner of the applicant and/or licensee;
- any director of the applicant and/or licensee;
- any officer of the applicant and/or licensee;
- any representative or agents of the applicant and/or licensee; and
- any such person as may be determined by the Commission.
The applicant and/or licensee has to satisfy an initial test and is required to thereafter act in a “fit and proper” manner on an on-going basis in relation to both its business with the Commission and with its clients. Pursuant to the Guide, the test shall be applied on the basis of the Commission’s perception of the risk posed by Relevant Persons who are connected to the licensee and/or applicant and who are involved in providing financial advice or financial services or any activity that places them in control of clients’ assets, including money.
“Relevant Persons” are:
- beneficial owner(s) of the applicant/licensee;
- any person who is to be employed by, or associated with the applicant/licensee;
- any agent or representative of the applicant/licensee;
- the officer(s);
- any shareholder of the applicants/licensees;
- the related corporations of the applicant/licensee and the officers(s) of those related corporations.
The Commission’s approach is a cumulative one, that is, it may conclude that a licensee and/or applicant has not met the “fit and propriety” test by considering various cumulative facts and circumstances, each of which on its own would not have led the Commission to determine a lack of fitness and propriety.
Where any of the provisions of the Guide are breached, the Commission is empowered to decide whether those involved continue to satisfy the “fitness and propriety” test. Failure to satisfy the “fitness and propriety” test shall mean that a person shall not be able to act or continue to act for a licensee. Further, in the event the Commission reaches the conclusion that an officer of a licensee has not satisfied the “fit and propriety” test, it may, pursuant to section 24(7) of the FSA Act, after giving such officer and the licensee an opportunity to make representations, direct the licensee to remove such officer.
Criteria for assessing Fitness and Propriety
In concluding whether the test was satisfied, the Commission shall apply a ‘balance of probabilities’ standard and shall on a best endeavors basis, assess all relevant evidence, irrespective of whether it is classed as positive or negative, including but not limited to changes in key relationships such as auditors and bankers and may enquire about the reasons for such changes.
The criteria for assessment of “fit and proper” are as follows:
- Honesty, integrity, diligence, fairness, reputation and good character;
- Competence and capability; and
- Financial soundness.
In introducing the revised guidelines to the “fit and propriety” test, the Commission seeks not only to establish an international benchmark for licensing and for ongoing regulation of licensees and/or applicants but also to, inter alia, protect the interests of investors by deterring dishonest, incompetent, unskilled or otherwise inappropriate operators in Mauritius and to encourage high standards of conduct within the financial markets of Mauritius. It is to be noted that the FSA Act empowers the Commission to reassess the fitness and propriety of any licensee and to accordingly take measures based on the assessment, should the need so arise.