The fit and proper persons requirement

The fit and proper persons requirement was introduced on 27 November 2014 (for NHS providers) to much fanfare with the stated aim of making NHS providers and their directors more accountable and to encourage a more open and transparent culture. Now, four years on, we look at how the requirement works in practice and how it might be extended in the future.

Recap – what is the requirement?

Providers cannot appoint, or have in place, an individual unless they:

• are of “good character”
• have the necessary qualifications, competence, skills and experience
• are healthy enough (with reasonable adjustments in place if necessary) to perform their role.

In addition, the individual must not have been responsible for or involved in any serious misconduct or mismanagement while carrying out a regulated activity.

They can’t be bankrupt, on a barred list or have a legal impediment that would stop them from taking the role.

The employer must consider any criminal convictions and removals from any professional register, but these factors are not absolute barriers to appointment.

Under the regulations the obligation applies to directors and “equivalents” but the Care Quality Commission (CQC) guidance says that this is limited to executive, non-executive, interim and associate directors only.

The CQC is responsible for ensuring that organisations comply with the duty. It also has the power to impose conditions on a provider’s licence to ensure that the organisation acts to remove a director who is not fit and proper.

The CQC’s guidance states that it requires chairs to confirm that all newly appointed directors have been assessed and to declare that they are satisfied that the individuals are fit and proper persons.

If an organisation becomes aware that a director is no longer able to satisfy the fit and proper person requirement, it must take such action as is necessary and proportionate to ensure that a fit and proper person takes up the role and that, if the director is registered, that their regulator is informed.

How it has worked in practice

Most NHS providers have introduced a fit and proper person requirement policy or procedure setting out how they will apply the requirement in recruitment, how they will keep it under review and how they will investigate concerns when they arise.

We have given advice most frequently about concerns and how to investigate them properly.

The first decision for a provider to take is whether a concern is sufficiently serious to merit an investigation. That is not always an easy question. Most of the advice we have given has been in cases where there is a concern about the director’s “good character” rather than allegations of “serious mismanagement “ or “serious misconduct”.

“Good character” is a subjective concept and the guidance from the CQC on how to assess whether someone remains of good character is broad.

There is no statutory guidance on how to interpret “good character”, however the CQC set out the features normally associated with “good character” as being:

• honesty
• trustworthiness
• integrity
• openness/transparency
• ability to comply with the law.

The CQC guidance also says that a director should be someone in whom the NHS provider, the CQC, people using the services and the wider public “…can have confidence and who will comply with the law”.

We have advised several of our clients on the best way to conduct an investigation into concerns and have suggested a step-by-step process in each case. It is important that any investigation is carried out with regard to general principles of fairness and natural justice.

In some cases, it may be appropriate to commission an external investigation of the concern to establish the facts. In determining whether an asserted fact is proven the test is the balance of probabilities (i.e. the asserted fact is more likely to be true than not).

As a general principle, directors should be given the opportunity of responding to the concern as part of the investigation process.

Ultimately the NHS provider must come to a decision on whether the director remains a fit and proper person. If they conclude that they do not, an employment/HR process will be necessary to effect a fair dismissal.

The future

As part of his report into Liverpool Community Health NHS Trust, Dr Bill Kirkup recommended that the  government undertake a review of the fit and proper persons requirement. This recommendation was accepted by the government on 8 February 2018 and it announced in May this year that the review would be led by Tom Kark QC.

The review, which is due to be published shortly, has considered the scope, operation and purpose of the fit and proper person test as a means of specifically preventing the re-deployment or re-employment of senior NHS managers where their conduct has fallen short of the values of the NHS.

The terms of reference for the review include:

• whether to extend the requirement to other NHS organisations, not just providers and whether to extend beyond directors
• to consider whether to specify the following as “misconduct” within the test:
  • a failure to cooperate with a properly constituted review or investigation
  • a loss or falsification of records
  • bullying and harassment
  • conduct which might inhibit or discourage appropriate whistleblowing
  • a failure to secure relevant approvals for, or notify relevant bodies of, any “settlement agreements” and associated payments
• to review the application of the test compared with models of professional regulation in other areas of employment, for example those applying to clinicians.

The extension of the fit and proper requirement to other NHS bodies may be inevitable but it does not sit easily with CQC enforcement given that only providers fall within their remit.

The terms of reference also indicate a willingness on the part of the government to be stricter in the application of the requirement. The examples of potential “misconduct” appear to have come from some of the more widely reported cases.

Although it is difficult to disagree with the proposition that these elements could amount to “misconduct” it will cause some alarm to directors if these specific elements are added into the requirement without further detail. For example, what does “inhibiting” whistleblowing mean? What does it mean to “discourage” whistleblowing? Would a requirement that an employee comply with the employer’s raising concerns policy fall within these categories? We would hope that the Kark report will provide us with some answers.

Conclusion

It is very likely that the current fit and proper persons requirement will be extended by the government to include NHS bodies (other than providers) and that it will become more restrictive. NHS bodies would be well advised to watch out for the next developments to ensure that existing policies and procedures are updated to reflect the changes.

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