A fit-and-proper assessment is a regulatory review of whether a proposed member of a bank’s management body is suitable for the position. It is normally completed before the appointment receives supervisory approval. The competent authority depends on the institution concerned: the European Central Bank decides for significant banks within its direct supervisory remit, whereas the responsible national supervisor generally decides for less significant institutions. The allocation of responsibilities differs when a new banking licence is being granted.
Source: European Central Bank (ECB) (source). This glossary entry is an independently worded adaptation of the cited information.