Fitness and Propriety
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Insurers must ensure that persons occupying key positions within the insurer have the degree of probity and competence commensurate with their responsibilities.
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For this purpose, insurers should have in place policies and procedures to address fitness and propriety. These policies and procedures should at a minimum address the criteria for fitness and propriety that APRA uses to assess fitness and propriety set out in paragraph 6.
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For locally-incorporated insurers, persons occupying key positions means:
(a) directors;
(b) senior managers;[31]
(c) the insurer’s auditor appointed under the Act and approved by APRA (Approved Auditor);[32] and
(d) the insurer’s actuary appointed under the Act and approved by APRA (Approved Actuary),[33] where relevant.
- For foreign-incorporated insurers operating in Australia as branches (foreign insurers), persons occupying key positions means:
(a) senior managers of the Australian operations;
(b) the foreign insurer’s agent in Australia appointed under the Act;[34]
(c) the foreign insurer’s Approved Auditor; and
(d) the foreign insurer’s Approved Actuary, where relevant.
- The criteria for fitness and propriety[35] are as follows:
(a) the person has not been convicted of an offence against or arising out of the Act or the Financial Sector (Collection of Data) Act 2001;
(b) the person has not been convicted of an offence against or arising out of a law in force in Australia, or the law of a foreign country, if the offence concerns dishonest conduct or conduct relating to a financial sector company within the meaning of the Financial Sector (Shareholdings) Act 1998;
(c) the person has never been bankrupt, has not applied to take the benefit of a law for the relief of bankrupt or insolvent debtors, or has not compounded with his or her creditors;
(d) the person has no actual or potential conflicts of interest that are likely to influence their ability to carry out their role and functions with appropriate probity and competence;
(e) the person has adequate experience and demonstrated competence and integrity in the conduct of business duties;[36]
(f) the person is not of bad repute within the business and financial community;
(g) in the case of an Approved Auditor:
(i) the person is not a director or employee of the insurer or of a related body corporate within the meaning of section 50 of the Corporations Act 2001; and
(ii) the person is registered as an auditor under the Corporations Act 2001; and
(h) in the case of an Approved Actuary, the person is not the Chief Executive or a director of the insurer, or of a related body corporate within the meaning of section 50 of the Corporations Act 2001 (except where that related body corporate is a subsidiary of the insurer).
- A person may not act as a director, a senior manager or an agent in Australia if that person is a disqualified person.[37] The disqualification criteria are set out in the Act.[38]