The BRUBEG does not merely make selective adjustments to the existing Fit and Proper requirements under German supervisory law, but fundamentally revises them. The focus is on implementing the provisions of CRD VI. The BRUBEG was published in the Bundesgesetzblatt on 30 March 2026 and came into force in large parts on 1 April 2026.
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In addition to the areas outlined in our previous articles, the BRUBEG also introduces new regulations governing the ‘Fit and Proper’ requirements – that is, the criteria for assessing the suitability of senior management in credit institutions – bringing them into line with a more uniform and, at the same time, stricter EU-wide framework. The aim of this reform is to identify shortcomings in personal and professional suitability at an early stage and to strengthen governance structures in the banking sector in the long term.
Many of the new regulations were already in effect through BaFin’s established administrative practice; however, in some respects, the regulations are being further tightened. For German practice, the fundamental extension of the scope of application to holders of key functions below the management level and the continuous assessment of suitability appear to be particularly crucial.
Extension of the personal scope of application
A key change is the extension of the personal scope of the Fit and Proper assessment. Whilst the requirements previously focused primarily on senior management and members of supervisory and administrative bodies, holders of key functions and contractually bound intermediaries are now also explicitly included (see Section 25e KWG-E).
This extension marks a paradigm shift: in future, it will also cover persons who exercise significant influence over the management and supervision of an institution or a (mixed) financial holding company without themselves being members of a governing body. This includes, in particular, heads of central control functions such as risk control, compliance and internal audit. The group of regulated function holders is thus significantly expanded, which in practice considerably intensifies the appointment process and the search for suitable candidates.
Suitability requirements as an ongoing process
In terms of content, the familiar suitability criteria – professional qualifications, personal reliability and sufficient availability – remain decisive. What is new, however, is the way in which these requirements are classified under supervisory law.
The suitability assessment is no longer understood merely as a one-off requirement at the time of appointment, but as an ongoing process subject to continuous monitoring. Accordingly, the new regulations oblige institutions to regularly review the suitability of the relevant individuals. Should this suitability cease to exist, appropriate measures must be taken without delay, which may extend as far as dismissal. Professional and practical suitability is unlikely to cease to apply whilst a person is actively performing their duties. At most, a requirement for regular further training and professional development is likely to be relevant here. A change in availability or a loss of reliability are the only conceivable grounds for a lack of suitability after the person has been successfully appointed and approved by BaFin.
Extension of notification and reporting obligations
Consequently, the notification and reporting obligations are also being significantly extended. In future, ‘large undertakings’[1] in particular must not only notify the appointment and dismissal of directors, but also personnel changes involving holders of specific key functions.
Another new feature is a prior notification requirement for intended appointments of directors or members of the administrative or supervisory body. Of particular practical relevance is the introduction of a 30-working-day deadline for notifying the appointment of a director prior to the assumption of the role. Furthermore, changes relating to reliability, professional suitability or availability must be reported immediately.
The prior notification requirement is already in line with the existing administrative practice of BaFin and the Bundesbank, under which, in any event, senior managers had to be notified to the supervisory authority with sufficient lead time prior to their appointment or could only be appointed after approval. A clear deadline now applies in this regard.
Overall, this leads to significantly increased transparency vis-à-vis the supervisory authority and requires correspondingly adapted internal reporting and documentation processes.
New documentation requirements
A particular practical challenge arises from the new documentation requirements under Section 25c(4a)(8) of the draft KWG. Institutions are obliged to draw up a comprehensive and continuously updated overview of the tasks, competences and responsibilities of all members of the management bodies and key function holders.
This goes beyond a purely organisational presentation and requires a clear allocation of individual responsibilities as well as transparent reporting lines. Consequently, the workload associated with internal governance and documentation structures is increasing significantly.
Conclusion and Outlook
With the new Fit & Proper requirements, the BRUBEG is leading to a further tightening of the supervisory requirements for the internal governance of credit institutions. The greater involvement of key function holders, the continuous monitoring of suitability and the expanded powers of the supervisory authority highlight a trend towards more intensive regulatory oversight of internal organisational structures.
For institutions, this means increased implementation costs, particularly with regard to processes, documentation and internal controls. At the same time, the new regime offers the opportunity to define governance structures more clearly and address risks at an earlier stage.
Overall, it is evident that Fit & Proper requirements are increasingly no longer viewed merely as a formal requirement, but as an integral part of effective and forward-looking corporate governance.
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[1] “Large undertakings” within the meaning of the newly introduced Section 1(1c) of the German Banking Act (KWG) are large institutions and large subsidiaries, as well as (mixed) parent financial holding companies authorised under Section 2f(1) of the KWG that have a large institution within their group.
