APRA Prudential Standard CPS 520 Fit and Proper

By : 6clicks
Prudential Standard CPS 520 Fit and Proper (CPS 520) sets out APRA’s requirements in relation to assessing the fitness and propriety of responsible persons of authorised deposit taking institutions, general insurers, life companies and private health insurers, collectively referred to as APRA-regulated institutions. This PPG aims to assist private health insurers in complying with those requirements and, more generally, to outline prudent practices in relation to fitness and propriety.
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This Prudential Standard sets out minimum requirements for APRA-regulated institutions in determining the fitness and propriety of individuals to hold positions of responsibility. Its objective is to ensure that an institution prudently manages the risks that persons acting in responsible person positions who are not fit and proper pose to the institution’s business and financial standing.

The ultimate responsibility for ensuring the fitness and propriety of the responsible persons of an APRA-regulated institution rests with its Board of directors (or equivalent).

Persons who are responsible for the management and oversight of an APRA- regulated institution, and persons employed by a member of the group whose activities may materially affect the business or financial standing of the group, need to have appropriate skills, experience and knowledge, and act with honesty and integrity. These skills and qualities strengthen the protection afforded to depositors, policy holders and other stakeholders. To this end, institutions need to prudently manage the risk that persons in positions of responsibility might not be fit and proper.

The key requirements of this Prudential Standard are that an APRA-regulated institution and a Head of a group must:

  • maintain a Fit and Proper Policy that meets the requirements of this Prudential Standard;
  • ensure that the fitness and propriety of a responsible person generally be assessed prior to initial appointment and then re-assessed annually;
  • take all prudent steps to ensure that a person is not appointed to, or does not continue to hold, a responsible person position for which they are not fit and proper;
  • ensure that additional requirements be met for certain auditors and Appointed and Reviewing Actuaries; and
  • ensure that certain information be provided to APRA regarding responsible persons and the APRA-regulated institution’s and Head of a group’s assessment of their fitness and propriety.

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Jurisdiction Australia
Type Laws or related obligations