The Health and Social Care Act 2008 (Regulated Activities) Regulations 2014 requires all trusts to ensure that all executive and non-executive director posts (or anyone performing similar or equivalent functions) are filled by people that meet the requirements of the FPPR. The definition of directors includes those in permanent, interim or associate roles, irrespective of their voting rights at board meetings. These regulations were introduced in November 2014 and the fundamental standards came into force in April 2015.
The regulations (Section 1, Paragraph 5, or 'Regulation 5' as CQC refers to them in its guidance) place a duty on trusts to ensure that their directors, as defined above, are compliant with the FPPR. The regulations stipulate that trusts must not appoint or have in place an executive or a non-executive director unless they meet the standards set out in this chapter. While it is the trust’s duty to ensure that they have fit and proper directors in post, CQC has the power to take enforcement action against the trust if it considers that the trust has not complied with the requirements of the FPPR. This may come about if concerns are raised to CQC about an individual or during the annual well-led review of the appropriate procedures.
Summary of the requirements for fit and proper persons
According to the regulations trusts must not appoint a person to an executive or non-executive director level post unless, as stated in Paragraph 5 (3), they meet the following criteria:
- are of good character
- have the necessary qualifications, competence, skills and experience
- are able to perform the work that they are employed for after reasonable
adjustments are made
- have not been responsible for, privy to, contributed to or facilitated any serious
misconduct or mismanagement (whether unlawful or not) in the course of carrying on
a regulated activity or providing a service elsewhere which, if provided in England,
would be a regulated activity
- can supply information as set out in Schedule 3 of the Regulations (see Appendix 1).
While it is the trust’s duty to ensure that they have fit and proper directors in post, CQC has the power to take enforcement action against the trust if it considers that the trust has not complied with the requirements of the FPPR.
When assessing whether a person is of good character, Paragraph 5 (4) of the regulation states that trusts should make every effort to ensure that, as a minimum, they seek all information to confirm the matters listed in Part 2 of Schedule 4.
In accordance with Part 2 of Schedule 4, a person will fail the good character test if they:
- have been convicted in the United Kingdom or elsewhere of any offence which, if committed in any part of the United Kingdom, would constitute an offence, and
- have been erased, removed or struck off a register of professionals maintained by a regulator of health care or social work professionals.
Part 1 of Schedule 4 lists categories of 'unfitness' that would prevent people from holding office or necessitate their removal from their position as a director, and for whom there is no discretion:
- the person is an undischarged bankrupt or a person whose estate has had a sequestration awarded in respect of it and who has not been discharged
- the person is the subject of a bankruptcy restrictions order or an interim bankruptcy restrictions order or an order to like effect made in Scotland or Northern Ireland
- the person is a person to whom a moratorium period under a debt relief order applies under Part VIIA (debt relief orders) of the Insolvency Act 1986
- the person has made a composition or arrangement with, or granted a trust deed for, creditors and not been discharged in respect of it
- the person is included in the children’s barred list or the adults’ barred list maintained under section 2 of the Safeguarding Vulnerable Groups Act 2006, or in any corresponding list maintained under an equivalent enactment in force in Scotland or Northern Ireland
- the person is prohibited from holding the relevant office or position, or in the case of an individual from carrying on the regulated activity, by or under any enactment.
The Health and Social Care Act 2008 (Regulated Activities) Regulations 2014 requires all trusts to ensure that all executive and non-executive director posts (or anyone performing similar or equivalent functions) are filled by people that meet the requirements of the FPPR.
The regulations stipulate that a director would be considered unfit if they were included on a barred list maintained under section 2 of the Safeguarding Vulnerable Groups Act 2006 or on any corresponding list. CQC’s guidance suggests that trusts should undertake a DBS check for directors on a case by case basis and only if they have a role that falls within the DBS eligibility criteria.
Some directors who carry out regulated activities (as defined by the Safeguarding Vulnerable Groups Act 2006), such as medical and nursing directors, will require an enhanced DBS check (with relevant barred lists).
For other directors, a standard DBS check should be considered if the director has direct contact and interactions with patients in the course of their normal duties. If a director is ineligible for a DBS check, trusts should carry out the other relevant checks (for example, qualifications and bankruptcy) to satisfy FPPR.
When considering DBS checks, trusts should consider whether the level of the check is a proportionate measure and appropriate to the level of risk.
This issue is particularly challenging for non-executive directors. CQC expects non-executive directors to have a standard DBS check if they are "walking the floor" as part of their normal duties. Non-executive directors are only eligible for an enhanced DBS check (without barred lists) if they are involved in a children’s hospital or their role means that they work in an independent, unsupervised way with children. When considering DBS checks, trusts should consider whether the level of the check is a proportionate measure and appropriate to the level of risk. Given that CQC assesses a trust’s decision-making process rather than the decision itself, trusts should be able to explain to CQC inspectors why they have or have not carried out a DBS check for directors on a case by case basis.
CQC's national guidance
In January 2018, CQC published its updated guidance in relation to FPPR following a consultation in 2017.
The guidance places ultimate responsibility on the chair to discharge the requirements of the FPPR placed on the trust. The chair must assure themselves that new applicants and existing post holders meet the fitness checks and do not meet any of the unfit criteria. The chair will be notified by CQC of any non-compliance with the FPPR, and holds responsibility for making any decisions regarding action that needs to be taken.
CQC’s guidance sets out the procedure for when it receives information that potentially alleges a director is not of good character. While there is no statutory guidance on what constitutes "good character", it names the following features that are "normally associated" with good character that trusts should take into account when assessing an individual under FPPR, in addition to the matters specified in Part 2 of Schedule 4:
- ability to comply with the law
- a person in whom the public can have confidence
- prior employment history, including reasons for leaving
- if the individual has been subject to any investigations or proceedings by a professional or regulatory body
- any breaches of the Nolan Principles of Public Life
- any breaches of the duties imposed on directors under the Companies Act
- the extent to which the director has been open and honest with the trust
- any other information which may be relevant, such as disciplinary action taken by an employer.
CQC guidance places ultimate responsibility on the chair to discharge the requirements of the FPPR placed on the trust.
Trusts also need to assure themselves that directors have not been complicit with serious misconduct or mismanagement. CQC’s guidance sets out detail on how providers should interpret "serious mismanagement" and "serious misconduct". It includes examples of the kinds of behaviours and situations that might constitute misconduct or mismanagement.
- Misconduct is described as a breach of "a legal or contractual obligation imposed on the director", such as an employment contract, criminal law or relevant regulatory requirements.
- Mismanagement is defined as "being involved in the management of an organisation [...] in such a way that the quality of decision making and actions of the managers falls below any reasonable standard of competent management". For example, failing to interpret data appropriately, failing to learn from incidents or complaints, and failing to model standards of behaviour expected of those in public life.
The above is not an exhaustive list and the legalistic language can be challenging to unpick. In plain English, "misconduct or mismanagement" is when a director does something wrong either by doing something, not doing something, or behaving in a certain way.
Furthermore, trusts have to decide whether any concerns reach the threshold of being "serious" in nature and determine the appropriate response. For example, CQC’s national guidance states that while minor breaches of security or failure to follow agreed policies and processes with limited repercussions would not amount to serious misconduct or mismanagement, incidences such as fraud, theft, assault, sexual harassment and bullying would breach this threshold.
While a single incident of misconduct may amount to serious misconduct, an isolated incident is unlikely to constitute serious mismanagement unless it threatens public confidence in the organisation and individual concerned. Serious mismanagement is rather a "course of conduct over time" and its seriousness can be assessed through the impact on quality and safety of care for service users, the safety and wellbeing of staff, and the organisation’s viability.
When assessing whether a director’s action(s) or omission(s) amount to "serious misconduct or mismanagement", trusts should consider whether the director played a central or peripheral role, and this will determine how "seriously" it should be taken. Trusts should also consider any mitigating factors.
CQC national guidance states that while minor breaches of security or failure to follow agreed policies and processes with limited repercussions would not amount to serious misconduct or mismanagement, incidences such as fraud, theft, assault, sexual harassment and bullying would breach this threshold.
How CQC responds to concerns about a director
CQC’s guidance sets out how it will respond to concerning information about a director from the public or members of staff. CQC may decide to convene a management review meeting (MRM) to determine if the information indicates a potential FPPR concern and needs following up with the individual and the trust. If so, CQC will then ask the person providing the information for their consent to share this information with the trust; CQC will strive to protect their anonymity if possible, except for exceptional cases where CQC is concerned about the potential risk to service users and will therefore need to progress without consent. While CQC will inform the director in question, it will not ask for their consent nor disclose the identity of the person who provided the information.
CQC will then send all information that falls under the FPPR to the trust, and ask them to respond with the action they intend to take within 10 days; this response needs to satisfy CQC that the trust has followed a robust process to ensure that the person in question is fit and proper for their role. The MRM will then re-convene and determine whether the trust has followed a robust process and made a reasonable decision. If not, the MRM may request further dialogue with the trust, schedule a focused inspection, or take regulatory action.
While a single incident of misconduct may amount to serious misconduct, an isolated incident is unlikely to constitute serious mismanagement unless it threatens public confidence in the organisation and individual concerned.
Complying with the legislation through robust policies and procedures
The requirements of the FPPR are integrated into CQC’s regulatory and inspection approach.
In order to assure themselves and CQC that they are not in breach of the regulation, trusts will be expected to demonstrate that they have robust processes in place for determining whether all new and existing directors are and continue to be fit, including:
- a process to ensure that all new director-level appointments are fit and proper as part of the recruitment process
- an annual process for regularly monitoring and reviewing the ongoing fitness of existing directors to ensure that they remain fit for their role, including consideration of serious mismanagement
- principles for conducting investigations into concerns about the fitness of a director
- a process for the right of appeal for directors.
This includes, but is not limited to:
- demonstrating with evidence that appropriate processes and systems are in place
- making every reasonable effort to assure themselves about an individual
- making specified information about directors available to CQC
- being aware of relevant guidelines available
- informing health and social care regulators if a director no longer meets the requirements of the FPPR, and taking action
- regularly reviewing a director's fitness through the appraisal system
- investigating any concerns about a person's fitness in a timely and proportionate way.
The following sections describe the priorities, challenges and key considerations that trusts should take into account at the different stages of implementing the FPPR, namely at recruitment, through ongoing reviews, and in the case of allegations.
Robust employment policies and procedures
Regulation 19 sets out that recruitment procedures must be established and operated effectively to ensure that directors meet the conditions of good character, and qualifications, competence, skills and experience necessary (as set out in Paragraph 5 (3)). In other words, all trusts must follow robust employment processes and make every effort to satisfy themselves as to the fitness of new applicants to director-level positions. This section describes how a trust may apply the FPPR at the appointment stage to director-level positions.
Trusts are expected to follow the guidelines on value-based recruitment. Appointment processes should be able to withstand external scrutiny and be periodically reviewed to ensure that they remain adequate and fit for purpose. In the case of an investigation into fit and proper persons concerns, trusts will be expected to demonstrate that robust checks were made at the outset.
The chair of the appointments panel will hold responsibility for complying with the FPPR at the time of recruitment, with support from the trust’s human resources department. The chair will need to declare that appropriate checks have been made in reaching a judgement of a candidate’s fitness. Trusts will be expected to record information relating to a director’s appointment within the personnel management system in line with data protection laws.
Establishing a process for keeping record of initial and ongoing monitoring of compliance with the FPPR is essential.
Robust processes for new appointments include a comprehensive pre-employment checking process as determined by the NHS employment standards. These include:
1. Proof of identity.
2. Professional registration and qualification checks, where relevant to the post.
3. Employment history and reference checks, one of which must be the most recent employer (including validation of a minimum period of three consecutive years of continuous employment or training and details of any gap) and including reasons for leaving.
4. Evidence of right to work in the UK.
5. Occupational health assessment.
6. Different types of criminal record check, including the Disclosure and Barring Service (DBS), where relevant to the post and where eligibility criteria are met.
It is advisable for trusts to check registers including disqualified directors, bankruptcy and insolvency, and removed charity trustees. CQC expects trusts to take account of some core public information sources when making director-level appointments and expects trusts to consider whether the director has ever breached any of the Nolan principles of public life. Undertaking Google and news searches of the individual is also advised. However, trusts should be mindful that not everything that can be found on an internet search is factually accurate.
'Core public information sources' include information from public inquiry reports, serious case reviews relevant to the trust that employed the individual at the time of the allegations, homicide investigations for mental health trusts, criminal prosecutions and ombudsmens' reports.
CQC expects trusts to take account of some core public information sources when making director-level appointments and expects trusts to consider whether the director has ever breached any of the Nolan principles of public life.
Given that there is no time limit in the regulations for considering acts of serious misconduct or mismanagement in a previous role, the question remains regarding how far back trusts should look when considering an individual’s employment history. Trusts should exercise their judgement as there can be no arbitrary cut-off point; each case should be considered on its merits. NHS employment standards guidance states that the number and type of references obtained for different applicants may vary. Assessing whether an individual is fit and proper at the recruitment stage is therefore uncertain in scope and potentially very wide in its range.
While having robust assurance processes at the recruitment stage is essential, this does not exclude the possibility of historical fit and proper person allegations arising, for example when an individual worked at a different trust. In this instance, the duty remains with the current employer to ensure the person is fit to carry out their role in the context of the concern raised.
In addition to the information required in the FPPR (Appendix 1), trusts may decide to require all directors to complete a self-declaration form on appointment which can be retained in HR files and updated on an annual basis. Trusts may want to consider obtaining full disclosure of any fit and proper persons reviews, investigations or confidentiality agreements in previous roles when assessing the fitness of a candidate at the appointment stage.
Trusts may want to consider obtaining full disclosure of any fit and proper persons reviews, investigations or confidentiality agreements in previous roles when assessing the fitness of a candidate at the appointment stage.
The role of the nominations committee and councils of governors (in foundation trusts only)
The council of governors is responsible for appointing and removing the chair and non-executive directors of NHS foundation trusts. The role of the nominations committee (with a majority of governor members) or the nominations committee for non-executive director appointments (if there are two nominations committees) is to interview and otherwise assess the candidates and to recommend suitable candidates for appointment to meetings of the full council. The committee also recommends to the council whether or not to approve the appointment of the chief executive. The council receives the trust’s report of compliance with FPPR for new and existing post holders.
The degree to which nominations committees involve themselves in chair and non-executive director appointments prior to interview varies greatly from trust to trust and it is not intended to cover all eventualities here. As a minimum, however, nominations committees and through them councils of governors will need to satisfy themselves that relevant employment checks, including checks which show compliance with the FPPR, have been carried out and they will want to satisfy themselves that the board has adequate assurances on the robustness of procedures.
The degree to which nominations committees involve themselves in chair and non-executive director appointments prior to interview varies greatly from trust to trust and it is not intended to cover all eventualities here.
Where a candidate has made a declaration in respect of their character that does not comply with the FPPR or in respect of past mismanagement and has offered an explanation of the circumstances, the nominations committee will need to investigate and form a view as to whether the explanation is sufficient to allow the candidate to continue in the appointments process.
Where the nominations committee decides to recommend such a candidate for appointment, the meeting of the council will need to satisfy itself that the investigation carried out by the nominations committee was robust.
Where a chair or non-executive director declares a change in the status of their character or where such a change becomes known, the council of governors will need to decide on a procedure to investigate and determine the case if such a procedure is not already in place.
Where NHS Improvement (NHSI) or CQC consider that serious mismanagement has occurred within the trust or where there has been a serious breach of a licence condition, councils of governors will need to decide on a procedure to investigate and deal with any cases if such a procedure is not already in place.
The role of NHS Improvement in ensuring NHS trust appointments meet the FPPR
NHSI is involved in appointing and removing NHS trust chairs and non-executive directors. NHSI’s role is to act as an external assessor to ensure the rigour and integrity of board appointments, which includes a duty to ensure that such candidates meet the FPPR. NHSI must provide robust evidence (detailed in Appendix 2) that the appropriate processes are in place to ensure that all newly appointed chairs and non-executive directors, or those that are currently in post, are and continue to be, fit for purpose. NHSI must also ensure that no appointments at this level meet any of the unfit criteria set out in the FPPR. If an NHS trust chair or non-executive director fails to meet the FPPR, this would provide grounds for NHSI or CQC to take formal action and remove them.
NHSI discharges this duty through its powers under the Trust Development Authority and can use these enforcement powers to deal with a breach of licence condition by requiring the trust to remove the unfit person from office or by taking such action itself.
In the case of foundation trusts, it is the responsibility of the board to assess if the directors are fit and proper.
If an NHS trust chair or non-executive director fails to meet the FPPR, this would provide grounds for NHSI or CQC to take formal action and remove them.
Ongoing assessment processes
This section outlines the ongoing duty placed on trusts to regularly review the fitness of existing post holders for their roles, and ensure that the FPPR are complied with throughout a director’s employment. This duty can be exercised through performance management processes, good HR record keeping and regular checks.
Trusts should have amended employment contracts and letters of appointment following the introduction of the FPPR to include that a condition of continuing employment is that the individual remains fit and proper as required under the regulations and CQC guidance. In the case of these conditions being unfulfilled, the contract should provide for termination.
It is for trusts to determine how often to review the fitness of a director. National guidance states that trusts should decide this based on the assessed risk to business delivery and/or to patients and service users posed by the individual and/or the role. Possible options for undertaking ongoing assessments include:
- The annual appraisal (or performance management) process. This provides an opportunity to discuss and assess a director-level post holder's continued fitness, including their competence, values and behaviour. Ordinarily, the chief executive appraises the executive directors and the chair appraises the non-executive directors. The chief executive will be appraised by the chair, who in turn is appraised through feedback from executive and non-executive directors (and governors if in a foundation trust).
- Director-level staff may also be required to complete a self-declaration form on a regular basis, confirming they are fit and proper. Directors in struggling organisations in particular may decide to discharge their duty to assure their boards that they are fit and proper despite the challenging external environment.
- As part of the assessment of continued fitness, trusts should also make periodic and sufficiently detailed checks for bankruptcy (including credit checks), registration and other easily accessible searches e.g. Google and news searches.
It is for trusts to determine how often to review the fitness of a director. National guidance states that trusts should decide this based on the assessed risk to business delivery and/or to the patients and service users posed by the individual and/or the role.
Fit and proper person processes therefore should be aligned with broader HR processes and be well documented. Given that allegations against a director may result in counter-claims, trusts need to consider how their fit and proper person process interacts with other relevant HR processes, such as handling bullying or harassment allegations.
CQC will assess whether trusts are assessing the ongoing fitness of existing directors under the well-led question during an inspection. CQC has guidelines for inspectors regarding the information that should be requested for CQC to assure itself a trust has made appropriate checks on its directors' fitness. This will include checking personnel files, records of appraisals and trusts' awareness and implementation of the various guidelines on relevant subjects including value-based recruitment, appraisal and development, and disciplinary action.
Under the FPPR, when an individual holding office no longer meets the criteria in Paragraph 5 (3), the trust must take "necessary and proportionate" action to ensure the position in question is held by an individual who meets such requirements. The trust must also inform the healthcare professional regulator in question if applicable. Regarding NHS trusts (not foundation trusts), NHSI is able to take appropriate action if an appointed individual is later found to be an unfit person. This is covered in the terms and conditions of appointment for chair and non executive directors.