163. The responsible function within a relevant institution should carry out the suitability assessment of key function holders before their appointment and should report the assessment results to the appointing function and the management body. Significant CRD- institutions, referred to in paragraph 173, should inform competent authorities of the assessment results regarding heads of internal control functions and the CFO, where they are not part of the management body.

164. If a relevant institution's assessment concludes that a key function holder is not suitable, the relevant institution should either not appoint the individual or take appropriate measures to ensure the appropriate functioning of this position. Significant CRD-institutions should inform the competent authority accordingly with regard to the heads of internal control functions and the CFO, where they are not part of the management body. Competent authorities may require such information from all relevant institutions and for all key function holders.

165. Where an assessment by a competent authority is also required, relevant institutions should take the necessary measures (e.g. by applying a probation period or a suspensive condition in the employment contract or by appointing acting heads) when appointing a key function holder to enable the institution to remove the key function holder from the position if she or he is assessed as not being suitable by the competent authority for that position.