Fit and Proper Person Requirement ("FPPR")
The 'Fit and Proper Person Requirement' ("FPPR") goes live for NHS bodies on 27 November 2014. (For independent healthcare and adult social care providers this requirement will not take effect until April 2015). Ahead of this launch, the Regulations (the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014) have been finalised and CQC has issued its Guidance for NHS bodies on how to comply with FPPR.
CQC's Guidance marks a change of thinking from the previous consultation papers on the FPPR. Most notably, it appears that CQC will be reluctant to use its statutory power, under the Care Act, to effectively bar 'unfit' directors from post by imposing conditions of registration upon providers. Instead, CQC's Guidance makes it clear this is a matter for providers, themselves, to ensure directors are 'fit', whereas CQC's role will be to monitor how well providers discharge this responsibility. CQC's findings in this respect will inform its ratings of providers under the 'Well-led?' question and, ultimately, CQC may take enforcement action against a provider for breach of the regulatory requirement.
However, the Guidance is confused as to the posts to which it applies and also raises a number of concerns in terms of the burden on providers in assessing fitness and what will happen where CQC disagrees with a provider's assessment.
To whom does the test apply?
The Regulations state that the test applies to "directors" and people performing "the functions of, or functions equivalent or similar to the functions of" a director. However, confusingly, CQC's Guidance states that the test will apply not only to executive and non-executive directors, but also to "associate directors who are members of the board, irrespective of their voting rights". However, the membership of boards is set by the constitution (in the case of FTs) or schedule 4 of the NHS act 2006 in the case of NHS trusts. Whilst other individuals (who may or may not have the title "associate director") may regularly attend board meetings, they are not strictly "members of the board". CQC's Guidance therefore creates a significant confusion as to the posts to which the FPPR test will apply. It is our understanding that CQC intend the test to apply to any individuals who are generally expected to attend board meetings (as opposed to individuals attending by way of a specific invitation (e.g. to present a paper)) even though they may not have voting rights at the meeting. However we are contacting CQC to clarify this point.
The nature of the test
The Guidance indicates that further joint guidance from CQC, Monitor and the NHS TDA on recruitment, performance management and disciplinary arrangements for CEOs and directors will be published on the 27 November and CQC state that providers will need to implement procedures in line with this Guidance as well as the Nolan Principles.
As well as certain objective elements (relating to checks on convictions and insolvency and whether the individual is on a DBS Barred List or disqualified as a director), the test requires an assessment of the individual's good character and whether they have ever contributed to, facilitated, or been privy to any "serious misconduct or mismanagement" in the course of carrying on a service of a type regulated by CQC.
- "Good character" – CQC's Guidance makes it clear that they will expect providers to assess individuals in terms of honesty, trust and respect;
- "Serious misconduct or mismanagement" – this is another subjective judgment and, although CQC's Guidance sets out examples of the sorts of behaviour which might constitute serious misconduct or mismanagement, it is not an exhaustive list. In order to reach views on whether an individual has been guilty of previous serious misconduct or mismanagement, however, the requirements on providers appear somewhat onerous (see below).
When to carry out the test?
In terms of recruitment, the Guidance is silent whether providers should carry out checks at the shortlisting stage, or only at the point they are ready to appoint.
However, the Regulations impose an on-going requirement around fitness of directors and the Guidance makes it clear that providers should have systems to ensure the assessment of directors not only at the time of recruitment, but also on an on-going basis and in response to any concerns that may be raised.
The burden of the test
CQC's Guidance states that, in carrying out FPPR due diligence on individuals, providers should have regard to certain core publically available information. CQC's website will provide some of this information or indicate where it can be found . The type of information to which CQC say providers should have regard includes public inquiry reports about a provider, Serious Case Reviews relevant to a provider, Homicide Investigations for mental health trusts, criminal prosecutions against providers, and Ombudsman reports relating to providers.
However, this information is necessarily organised and presented in relation to provider organisations, rather than individuals working within those organisations, and this potentially creates a considerable burden for the providers to sift through information relating to other organisations in order to identify any comments it contains upon the relevant individual now seeking employment as a director. There is a danger that this could lead to providers refusing to shortlist an applicant whose employment history includes work at organisations which may have featured heavily in previous investigations/reviews. Were providers to do this, it appears that individuals who did not make a shortlist on this basis would not have any redress.
If CQC disagree with Provider's Judgment
Although CQC do not seem inclined to exercise its own powers to impose conditions of registration identifying individuals as 'unfit', their Guidance states that they will consider it a breach of the FPPR if, on receipt of information about a director's fitness, a provider reaches a decision "that is not in a range of decisions that a reasonable person would make". By implication, this must mean that, in such a situation, CQC would consider the individual director 'unfit'. However, if, in such situations, CQC simply seek to hold the provider to account for breach of the Regulations by employing the director, rather than exercising its own power to impose a condition requiring the removal of that director, this could expose the provider to challenges in the Courts or Employment Tribunals should the provider subsequently seek to rely upon the CQC's view to support a decision to dismiss.
When will CQC assess compliance?
CQC's Guidance is clear that it will assess a provider's compliance with the FPPR at the following times:
- On applications for registration – the Chair will need to provide a declaration that appropriate checks have been undertaken in reaching a judgement that all directors are 'fit'.
- On inspection – CQC will assess whether providers are undertaking appropriate checks on new and existing directors; this may involve checking personnel files and records of appraisal.
- Whenever there is a serious systemic failure – CQC will check whether the FPPR test has been complied with. CQC made the point, however, that simply because a provider is in special measures will not mean that directors are 'unfit'.
- In response to concerns from the public or members of staff – CQC will not investigate these concerns themselves but will consider whether the information is significant and, if so, will seek the director's consent to pass this on to the provider to investigate. It is not clear, however, how such an approach will meet the expectations of the person raising the concern who may already have raised the issue with the provider organisation and may expect CQC itself to form a view as to the director's fitness.
As can be seen, there are a number of concerns regarding CQC's Guidance. CQC, themselves acknowledge that this is a learning phase for them and that the Guidance will be updated as part of the overarching guidance on meeting all the Fundamental Standards to be issued before 1 April 2015. In addition, it is hoped that the promised additional joint guidance being developed by CQC with Monitor and the NHS TDA will clarify some of the issues.
Suggested course of action:
- Providers should review their policies and procedures around assessing the 'fitness' of directors to ensure these:
- Cover all elements of the FPPR;
- Take into account the forthcoming joint guidance from CQC, Monitor and NHS TDA in relation to recruitment, performance management and disciplinary arrangements;
- Take into account the Nolan Principles;
- Provide for appropriate checks not only on recruitment of new directors but also on an ongoing basis for existing directors.
- Have appropriate procedures in place for them to carry out investigations if they are made aware of new information raising any concerns regarding the 'fitness' of directors.
How Bevan Brittan can help?
We can provide assistance and support on a range of issues including:
- Advice on policies and procedures in relation to recruitment, performance management, and disciplinary arrangements for directors
- Advising providers on conducting 'fitness' investigations and decisions in individual cases
- Liaising with CQC in relation to regulatory requirements
- Employment Tribunal challenges