Fitness and Propriety Assessment to Ensure Financial Firms Have Good People Doing Right Things during Perilous Times

In the context of rapidly evolving challenges, imposing regulations applicable to every transaction, every market innovation and every business scenario will have practical difficulties. It will increase the regulatory burden and promote a culture of compliance with the letter of law in a mechanical way by financial institutions. Eventually, taking business decisions during crisis periods in compliance with applicable rules and regulations will be in the hands of Board of Directors (BODs) and Key Management Personnel (KMP) of such institutions. Their fitness and propriety to hold such positions should, therefore, be a foremost requirement which needs to be emphasized in any given circumstance. No amount of regulations will ensure that public deposits are safe unless the decisions pertaining to management of such money are taken by individuals who are honest, well-qualified and experienced as well as acting with integrity. Not only the robust systems and procedures in financial institutions but also the quality and competence of individuals make a huge impact on effective governance in financial firms. This article sheds light on the significance of efficient enforcement of regulations applicable to fitness and propriety of BODs and KMP of financial institutions, to have robust risk governance structures in a crisis time like COVID-19 outbreak.