Summary

The requirement of suitability proceedings is not new in the Estonian financial sector – its motifs can be found already in the credit institution act in force before WWII. Suitability proceedings are a way of providing an assessment of a specific person and the values relating to that person within the context of the extremely strict requirements of the financial sector. The supervisory authority may find that certain circumstances or past actions of the person (including the values such actions carry) do not comply with the extremely strict requirements of the financial sector, are condemnable in society, and do not foster trust towards the person. The supervisors make suitability decisions every day, and by that, values are being shaped for the financial sector and its participants to adhere to. It is a direct supervisory proceeding that may result in a decision of the Financial Supervision Authority or the European Central Bank to declare the person unsuitable as a subject of the specific financial supervision, provide grounds for refusing authorisations applied for (e.g. activity licences or authorisations for acquisition of a qualifying holding are dependent on compliance with the suitability requirements), or even withdraw a previously issued authorisation (e.g. when the precepts of the Financial Supervision Authority are not adhered to and a person that does not comply with the legal requirements is assigned or retained as an executive).

The article explains the necessity of suitability in the financial sector as a whole and introduces the requirements of suitability proceedings. To add a practical function, it also refers to some relevant enforced judgments to illustrate the line between suitability and unsuitability in the financial sector.