The Government's latest proposals around the new 'fit and proper person' test seek to strengthen registration requirements, and increase accountability, at the level of the 'controlling mind' of health and social care providers: this will apply to NHS providers from October 2014, and will be extended to all CQC registered independent healthcare and adult social care providers from April 2015. The draft regulations published with the Consultation response simply relate to NHS providers; further regulations will need to be introduced to extend the test to independent healthcare and adult social care providers although it is anticipated that the nature of the test will be the same across the board.
The Government's proposal is for the test to apply to the 'controlling mind' of all types of providers (ie. not just directors of corporate providers, but also trustees of charities, members of governing bodies of unincorporated associations, partners in partnerships, and even to sole traders). (For the purposes of this alert all these roles are referred to as 'director' roles).
Partners/ sole traders are already subject to 'fitness' checks as part of their CQC registrations. The impact will be felt most, therefore, by providers which are "organisations" for the purposes of CQC registration (i.e. limited companies, LLPs, charities, and unincorporated associations).
Directors of healthcare providers which hold Monitor provider licences are already subject 'fit and proper person' requirements (under General Condition 4), but those requirements only cover issues of criminal background and insolvency. Likewise, the 'fitness' requirements on company directors under the Companies Act 2006 and of trustees under the Charities Act 2011, are similarly limited. The aim of the new test is to specifically assess the fitness of the 'director' to carry out a leading role for the relevant health and social care provider.
Nature of the test
The nature of the proposed test is that no individual should be appointed to a 'director' role unless:
- There is available information in relation to them of the type required for other staff: proof of identity, criminal record certificate where applicable; satisfactory evidence of conduct in previous employment; details of any previous employment involving work with children or vulnerable adults; documentary evidence of relevant qualifications, a full employment history (together with explanations of any gaps in employment); and satisfactory information about physical and mental health.
- The 'director' is "fit and proper" under the new test.
As originally proposed, the "fit and proper" test requires the individual:
- To be of "Good character"
- To have the qualifications, competence, skills and experience necessary for their role
- To be capable, by reason of health (after reasonable adjustments) of properly performing tasks intrinsic to their role
- Not to be "unfit" on the basis of certain insolvency matters
- Not to be on the Children's or Vulnerable Adults Barred List
- And not to be prohibited from holding the role by any order or enactment (e.g. under the Companies Act Directors Disqualification Order).
However, following the Consultation, certain aspects of the "fit and proper" test have been changed:
- The definition of misconduct and mismanagement – perhaps the most stringent aspect of the "fit and proper" test as originally proposed was the stipulation that an individual would be unfit if they had been responsible for, privy to, contributed to, or facilitated, any misconduct or mismanagement (whether unlawful or not) in the past. As a result of concerns over this, the test has been restricted only to apply to "serious" misconduct and mismanagement; CQC will provide further guidance as to what may constitute serious misconduct or mismanagement and the Government response indicates that this might have regard to the NHS Code of Conduct and how it aligns with the Nolan principles.
- Criminal convictions – it is no longer proposed that convictions that resulted in at least three months' imprisonment in the previous five years will automatically render a person "unfit". Instead, the "fit and proper person" test simply requires any previous criminal convictions to be considered as part of the wider assessment of whether the director is of "good character". (For Monitor licence holders, the more stringent restriction on criminal background for directors will also apply under that regime).
- However, as a result of the Consultation, providers will also be expressly required to consider whether an individual has been erased, removed or struck-off from a register of health care or social work professionals when determining whether they meet the requirement to be "of good character".
- Although appearing on the Children's or Vulnerable Adults Barred Lists will automatically render an individual unfit to be a "director", providers will not be required to carry out DBS checks on directors unless their role falls within the definition of "regulated activity" for the purposes of the Safeguarding Vulnerable Groups Act; in other cases, providers will need to ascertain this by asking applicants whether they are on a relevant barring list.
A further change proposed in the draft regulations is that where an individual already holds a 'director' post but then ceases to meet the fit and proper test, there will be an obligation on the provider to "take such action as is necessary and proportionate to ensure that the office or position…is held by an individual who meets the test" and, where that individual is a health care professional, social worker or other professional registered with a health care or social care regulator, to inform the regulator in question. This therefore imposes positive obligations on providers not only to remove 'directors' from post when they cease to meet the fit and proper person test, but also to refer them to any relevant professional regulator.
Compliance with the 'fit and proper person test' will be monitored by CQC at the time of a provider's initial application registration and, subsequently, upon receiving notification of appointment of any new directors. In addition, CQC can also review issues of directors' fitness on an on-going basis at the time of inspections if concerns about an existing director are raised. Failures by providers in terms of their initial, and on-going, scrutiny of directors, could impact on the rating issued by CQC (particularly in relation to the question of whether they are 'Well-Led'). In addition, failures could, in extreme cases, result in CQC taking enforcement action including to compel a provider to remove an 'unfit' director from post by imposing a condition on its registration.
Suggested course of action
The Government's Impact Assessment makes it clear that providers will need to carry out the necessary checks "to assure themselves and CQC that their directors exhibit the correct types of personal behaviour, technical competence and business practices to undertake their role". Providers will need to satisfy themselves of this not merely at the time of the appointment of directors but also on an on-going basis through performance proposals, as well as ensuring they have appropriate disciplinary policies and procedures in place to address issues where directors are found to be 'unfit'.
How can Bevan Brittan help?
We can provide assistance and support with:
- 'Fitness' decisions in relation to individuals
- Pre-appointment vetting and references
- Policies and procedures around assessment of fitness at appointment and on-going appraisal and performance management
- Disciplinary processes and investigations
- Applications for registration and enforcement action by CQC