Fit and proper tests: helping UK finance companies to comply with requirements and mitigate risks

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In highly regulated industries, there is a big focus on background screening to ensure that all new hires - and existing employees - are checked and vetted. The latest product to join the range of employment screening checks is the Fit and Proper Test - also known as the Fitness and Propriety Test. But what is it, how does it work, and as a hiring professional in the financial services industry, how do you ensure your fit and proper tests comply with industry standards?

As financial services companies in the UK strive to stay compliant with ever-evolving regulations, HR professionals face the challenge of helping their organizations maintain rigorous standards. One crucial tool that can help is a Fit and Proper (F&P) Test. This type of assessment can help financial firms meet their compliance requirements while also mitigating risks and strengthening organizational performance. In this blog post, we'll explore how an F&P test can be used to ensure full compliance and reduce risk.

An F&P test is an investigative process that evaluates an individual's suitability for a particular role or position. The tests are usually mandated by regulations and must be conducted for any individual that is nominated to a Board-level position or any other regulated role in the financial services industry.

The purpose of such tests is to ensure that the individuals nominated for such positions meet the standards set out by the regulators, including assessment of their experience, qualifications, skills, character, and reputation. The test also looks at any potential conflicts of interest that could arise due to their connections with other firms or individuals. The results of the test provide assurance to investors and other stakeholders that the organization has chosen suitable candidates who have appropriate expertise and integrity.

A well-structured F&P test can help financial services companies in a number of ways. Firstly, it provides them with more insight into an individual’s background before they are recruited and helps identify any potential risks associated with their appointment. This allows organizations to make informed decisions about who they recruit, avoiding potential problems down the line. Secondly, it ensures compliance with regulatory requirements, helping financial firms demonstrate their commitment to corporate governance and risk management best practices.

Lastly, an F&P test can provide valuable intelligence on managing risk across an organization. By assessing an individual’s suitability for a role based on their past performance and experience, organizations are able to reduce their exposure to risks associated with unethical behavior or poor decision-making. This type of proactive approach not only demonstrates good governance but also helps reduce costs associated with investigations into misconduct or mismanagement in future projects.

Veremark’s Fit and Proper Test

Veremark’s Fit and Proper Test is a Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) compliant questionnaire that is used to assess an individual’s fitness and propriety.

This is a test that helps to evaluate an individual’s honesty, integrity and reputation, competence and capability, and financial soundness. Senior Managers and Certification Regime (SMCR) firms are required to conduct the test to verify a staff member’s capability and trustworthiness to perform a controlled function or high-responsibility role. The firm is also responsible for assessing the continuing fitness and propriety of applicable staff, which may include annual and or role-related re-assessments.

What to expect from Veremark’s F&P test

While the F&P test is an essential part of hiring specific positions in the financial services sector, it’s important to understand the full scope of what the test does and doesn’t do.

What it does do:

  • Collects information about an individual’s honesty, integrity, reputation, capability and financial soundness utilizing a questionnaire-based test
  • Covers questions regarding criminal proceedings, civil proceedings, business and employment matters, conflict of interest, regulatory and other matters
  • Uses ‘yes’ or ‘no’ answer options for each question in the questionnaire
  • Informs employer of any red flags uncovered in the report

What it doesn’t do:

  • Performs additional checks, such as a reference check*, to collect or confirm information about an individual’s fitness and propriety
  • Provides alternate versions of the fitness and propriety questionnaire or the ability to edit the standard questionnaire

The end result is a report sorted by topics that presents the individual’s responses to each question and provide notes for any red flags or items to be aware of.


Veremark’s F&P test is an invaluable tool in helping UK financial services companies meet their compliance requirements while mitigating risks from unethical behavior or poor decision-making.

Among its many benefits, it provides assurance to investors that individuals appointed have the appropriate expertise and integrity necessary for the successful completion of projects without increasing risk exposure for the organization as a whole. By conducting F&P tests regularly and thoroughly vetting those appointed for board-level positions or other regulated roles, HR professionals can ensure full compliance while also protecting their organizations from potentially damaging losses due to mismanagement or misconduct.

*Reference checks are also one of many pre-hire checks that Veremark can perform alongside the Fit and Proper Test.

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What background check do I need?

This depends on the industry and type of role you are recruiting for. To determine whether you need reference checks, identity checks, bankruptcy checks, civil background checks, credit checks for employment or any of the other background checks we offer, chat to our team of dedicated account managers.

Why should employers check the background of potential employees?

Many industries have compliance-related employment check requirements. And even if your industry doesn’t, remember that your staff have access to assets and data that must be protected. When you employ a new staff member you need to be certain that they have the best interests of your business at heart. Carrying out comprehensive background checking helps mitigate risk and ensures a safer hiring decision.

How long do background checks take?

Again, this depends on the type of checks you need. Simple identity checks can be carried out in as little as a few hours but a worldwide criminal background check for instance might take several weeks. A simple pre-employment check package takes around a week. Our account managers are specialists and can provide detailed information into which checks you need and how long they will take.

Can you do a background check online?

All Veremark checks are carried out online and digitally. This eliminates the need to collect, store and manage paper documents and information making the process faster, more efficient and ensures complete safety of candidate data and documents.

What are the benefits of a background check?

In a competitive marketplace, making the right hiring decisions is key to the success of your company. Employment background checks enables you to understand more about your candidates before making crucial decisions which can have either beneficial or catastrophic effects on your business.

What does a background check show?

Background checks not only provide useful insights into a candidate’s work history, skills and education, but they can also offer richer detail into someone’s personality and character traits. This gives you a huge advantage when considering who to hire. Background checking also ensures that candidates are legally allowed to carry out certain roles, failed criminal and credit checks could prevent them from working with vulnerable people or in a financial function.

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