.svg "MCO-Color-logo")
Where there’s smoke, there’s fire. Licences and registrations act like a regulatory smoke detector in the financial services industry. As part of the pre-employment and onboarding process, firms check the licensing and registration statuses of potential employees to confirm they are deemed fit and proper persons for their respective roles. Lacking or non-current credentials sound the alarm that a person may not hold the fitness and propriety required to meet the regulatory expectations of their role. However, suitability is not a “set and forget” activity at the point of hiring. Ongoing credential checks, training, auditability, and a firm-wide culture of compliance form a larger picture of the regulatory safety for financial firms.
Regulators across every major market expect firms to confirm their people remain fit and proper on an ongoing basis, judged not only on the qualifications they hold but on how they conduct themselves day to day. If those ongoing checks slip, integrity gaps often resurface as employee conflicts of interest and misconduct. Without adequate monitoring and identification, it can be challenging for any firm to notice the smoke signals that may soon erupt in a blaze of enforcement action.
Alasdair Putt, Director at Kroll, explained in an MCO (MyComplianceOffice) webinar that fitness and propriety “is not just something that HR rolls out as a process, but managers have a responsibility to be aware of what their reports are doing as well… making sure that they remain fit and proper on a day-to-day basis in the course of the work that they’re performing.” Recent enforcement shows the real-world impact of inadequate systems, processes, and compliance oversight.
The cases below focus on five regulators in 2026. In each case, an individual fell short of the standard, underscoring the need for both ongoing monitoring of employee conduct and regular checks of employee registrations and licensing credentials. Hong Kong, Australia and Singapore assess people against an explicit “fit and proper” standard. The UK applies the same concept as “fitness and propriety” under its Senior Managers and Certification Regime. While the US does not use the same terminology, it enforces equivalent standards through registration, qualification and supervision requirements. While the definition of fit and proper persons in financial services regulation may show nuances by region, the principles of ensuring fitness and propriety remain aligned.
As Kiana Leung, Senior Associate at Kroll, highlighted in the same webinar, “A one-time check at onboarding is definitely insufficient. Fitness and properness checks are continuous and dynamic as time goes on. If firms are relying solely on the staff declarations, they may expose themselves to significant regulatory risk.”
In April 2026, the Australian Securities and Investments Commission (ASIC) banned a former financial adviser for 10 years and suspended his firm’s Australian financial services licence.1 ASIC found he was not a fit and proper person and not competent to provide financial services, having accepted A$100,000 in conflicted remuneration without disclosing it while steering clients’ superannuation into a single product, and having made false statements in advice documents. A fitness failure at the top of a licensee resulted in putting every client beneath it at risk.
In March 2026, the Securities and Futures Commission (SFC) banned a former licensed representative of an asset management firm for life and fined him HK$17.43 million.2 He had caused a fund he managed to extend a series of unsecured loans to a company he controlled, a plain conflict of interest that the SFC found to be wilful and dishonest and that called his fitness and properness to be licensed into question. The dishonesty and the conflict were not separate failings. They were the same failing seen from two angles.
In July 2026, the Monetary Authority of Singapore (MAS) issued a three-year prohibition order against a former appointed representative and chief investment officer of a real estate investment trust manager.3 He had earlier received a conditional warning for conspiring with another person to create a false or misleading appearance in the market for the trust’s units. On that basis, MAS was satisfied he was not a fit and proper person. Seniority offered no shield; if anything, it raised the stakes.
In March 2026, the Financial Conduct Authority (FCA) banned the owner and former chief executive of a foreign exchange and contracts-for-difference trading firm, finding him not fit and proper for a lack of honesty and integrity.4 Over a decade he undermined the firm’s anti-money laundering controls, gave false information to regulators, falsified his own university degree certificate, and had a colleague sit a required anti-money laundering test on his behalf. Fitness and propriety turns on competence and integrity; he manufactured the appearance of both.
The US does not use the phrase “fit and proper,” but upholds its expectations in the same manner through registration, qualification and supervision. In April 2026, the Securities and Exchange Commission (SEC) settled fraud and registration charges against the owner of a group of investment advisory firms and ordered him to pay nearly US$2.4 million.5 He had assured investors in the venture capital funds he managed that their money was “low risk, high return,” touting institutional co-investments that never happened, and did not disclose his conflicts of interest. The individual and his advisory firm also failed to file any registration with the SEC for their securities offerings. Firms must file a registration statement with the SEC under federal law before they can offer or sell new securities to the public. It provides transparent financial and business data so investors can make informed decisions. The offender agreed to an associational bar, the US mechanism for removing someone judged unfit to work in the industry.
Across these cases, a clear pattern emerges. The behaviours of an individual deemed unfit overlap with those creating conflicts of interest, reputational damage to the firm, and potential client harm. A falsified degree certificate, a conflicted payment left undisclosed, a false certification signed off; each is both a fitness failure and a conduct risk. For this reason, regulators now place a significant focus on a firm’s compliance culture and the ongoing checks and oversight that ensure proper employee conduct.
“Traditionally, fit and proper checks look mostly at hard credentials such as degrees, licences, records, credit scores. While these remain fundamental, modern regulatory expectations place a far greater focus on your employees’ conduct and how the compliance culture is being implemented across the firm.”
Kiana Leung, Kroll
A set-and-forget approach also trusts people to declare their own problems. As Leung put it, “We are all human beings, and human beings suffer from cognitive biases. Sometimes we forget to report things, and sometimes we intentionally omit information. If your compliance monitoring relies entirely on what your staff chooses to tell you, you are vulnerable.” She also notes that regulators such as Hong Kong’s SFC place “primary responsibility on senior management to proactively police the competence, honesty and financial integrity of the employees in real time.” With this clear accountability, a firm’s senior staff must equip themselves with the systems and processes to withstand regulatory scrutiny should issues arise.
Fitness and propriety and oversight must both work together as a continuous system. That oversight often starts closer to employees than the compliance department. Putt made the case for the line manager as the first line of defence in this respect: “A manager who works with that person on a day-to-day basis… is going to have a much better chance of identifying a potential issue and then dealing with it.”
Additionally, ongoing training and education reinforce a firm’s compliance culture. Leung stressed the need for “formal continuous training programs for staff to keep abreast of the industry developments, ethical standards, and also the evolving regulatory knowledge.” She warned that “Many spreadsheets or outdated tracking mechanisms may no longer be considered adequate by your regulators,” pointing firms towards technology-driven audit trails instead. Putt made the same point from the enforcement side, saying that everything “needs to be well and truly documented and with a clear audit trail,” to give firms a defensible position under regulatory scrutiny.
Onboarding is where fit and proper begins, though it should not be where it ends. Regardless of the regulatory jurisdiction in which a financial firm operates, it remains imperative to treat fitness and propriety as a continuous obligation, not a tick-box activity at the point of hire. In practical terms, meeting a regulator's expectations means monitoring employee conduct as closely as their credentials, keeping training current, and holding a clear, documented audit trail that can stand up to any regulatory investigation. With multiple aspects of a robust compliance program working together, firms stand a much better chance of putting out potential fires before they escalate.
Regulatory technology (RegTech) plays a critical role in turning fit and proper from a point-in-time check into ongoing assurance. As roles change and requirements evolve, firms need oversight that runs continuously rather than surfacing gaps at the next annual audit.
Compliance teams often ask which tools can assist in ensuring employee fitness and properness on an ongoing basis. A purpose-built RegTech platform, such as MCO, tracks registrations and licensing, along with continuing education requirements against the regulatory needs of the firm.
MCO’s Representative Registrations and Licensing (RRL) solution gives compliance teams a structured way to manage fitness and propriety across the firm. With MCO, firms can:
MCO’s Know Your Employee Compliance Suite also offers firms a complete compliance solution, bringing together registrations and licensing, personal account dealing activity, gift and entertainment, MNPI and insider list management, employee conflicts of interest, and much more into one system where firms can quickly identify broader risk areas and related red flags.
Are you ready to help your firm reduce regulatory risk and withstand even the most intense regulatory scrutiny? See the MCO complete compliance suite in action now.
1 Australian Securities and Investments Commission, media release 26-073MR, “ASIC bans former financial adviser Rhys Reilly for 10 years and suspends Conexus Group’s AFS licence,” 10 April 2026. https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-073mr-asic-bans-former-financial-adviser-rhys-reilly-for-10-years-and-suspends-conexus-group-s-afs-licence/
2 Securities and Futures Commission of Hong Kong, “SFC bans Lui Pak Tong for life and fines him $17.43 million for misconduct,” 24 March 2026. https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=26PR47
3 Monetary Authority of Singapore, “MAS Issues Prohibition Order against Mr Li Jinbo,” 27 July 2026. https://www.mas.gov.sg/regulation/enforcement/enforcement-actions/2026/mas-issues-prohibition-order-against-mr-li-jinbo
4 Financial Conduct Authority, “FCA bans Kasim Garipoglu from working in UK financial services,” 13 March 2026. https://www.fca.org.uk/news/press-releases/fca-bans-kasim-garipoglu-working-uk-financial-services
5 US Securities and Exchange Commission, “SEC Institutes Settled Order as to Florida Investment Advisory Firms and Owner for Fraud and Other Violations,” 8 April 2026. https://www.sec.gov/enforcement-litigation/administrative-proceedings/33-11413-s
MCO webinar, “Hong Kong Regulation in Motion: Digital Assets and Conduct Risk.” https://mco.mycomplianceoffice.com/webinar/hong-kong-regulation-in-motion-digital-assets-and-conduct-risk
MCO fit and proper additional reading: https://mco.mycomplianceoffice.com/solutions/fit-and-proper
Fit and proper is the standard financial regulators use to decide whether a person can be trusted to perform a regulated role. It typically covers honesty and integrity, competence and capability, and financial soundness. Hong Kong, Australia and Singapore use the term directly, the UK assesses fitness and propriety under its Senior Managers and Certification Regime, and the US enforces the equivalent through registration, qualification and supervision requirements.
No. Regulators expect fitness and propriety to be assessed on an ongoing basis, not only at onboarding. A person who was fit and proper when hired can cease to be so, and firms are expected to monitor conduct continuously and act on red flags as they arise.
The traits that make someone unfit, such as dishonesty or a willingness to put personal gain first, are the same traits that create conflicts of interest. In 2026, regulators sanctioned individuals whose fit and proper failures surfaced as self-dealing, undisclosed conflicted payments, and falsified records.
Purpose-built RegTech platforms help firms manage fit and proper compliance on an ongoing basis. MCO provides a Representative Registrations and Licensing solution that tracks licensing, qualifications and continuing education, integrates with HR systems, and maintains an audit-ready record of fitness and propriety.
