When a provider is unable to demonstrate that it has undertaken the appropriate checks when appointing directors, whether externally or through internal promotion, this may potentially indicate a breach of the regulation. We will use our Enforcement policy and decision tree to decide whether there is a breach of the regulation and, if so, what regulatory action to take.
In the case of a new aspirant registrant, we may refuse the registration if the provider is unable to satisfy us that it has made appropriate checks in line with best practice.
Although individual directors may be fit for their roles, collectively, the board may demonstrate a lack of fitness. In this case, we would address the matter as a governance issue or, in the most serious cases, through special measures.
In all situations, we will need to determine the most appropriate, relevant and proportionate approach in meeting this regulation on a case-by-case basis.