Recommendation 80

Disqualification of directors

Accepted in principle
A finding that a person is not a fit and proper person on the grounds of serious misconduct or incompetence should be a circumstance added to the list of disqualifications in the standard terms of a Foundation Trust’s constitution

We agree that the public have the right to expect that people in leading positions in NHS organisations are fit and proper persons; and that where it is demonstrated that a person is not fit and proper, they should not be able to occupy such a position.  Monitor and the Care Quality Commission are committed to ensuring that, taken together, their processes for registration and licensing reflect these principles.  Monitor’s licence conditions already require providers to ensure that no person who is an unfit person may become or continue as a director and that they ensure that its contracts of service with its directors contain a provision permitting summary termination in the event of a director being or becoming an unfit person.

In order to strengthen this, the government issued in July 2013 a consultation onStrengthening corporate accountability in health and social care.   This proposes a new requirement that all board directors (or equivalents) of providers registered with the Care Quality Commission must meet a new fitness test. We are proposing that this test includes checks about whether the person is of good character including past employment history, if the individual has the qualifications, skills and experience necessary for the work or office, as well as the more traditional consideration of criminal and financial matters.

The government proposes that the fit and proper persons test will now be used as a mechanism for introducing a scheme for barring directors who are unfit from individual posts by the Care Quality Commission at the point of registration.  Where a director is considered by the Care Quality Commission to be unfit it could either refuse registration, in the case of a new provider, or require the removal of the director on inspection, or following notification of a new appointment. In taking forward a barring mechanism for unfit directors through a Care Quality Commission registration requirement we are putting in place an effective mechanism that does not require a new bureaucratic infrastructure. We will review the effectiveness of the approach and whether additional steps, including further legislation, are required in due course. Further details will be set out in the response to the consultation on corporate accountability which will be published shortly. We plan to publish the draft regulations for consultation at the same time.

In addition to regulatory mechanisms, we also believe it is important for organisations appointing and employing senior leaders to use the means already available to them (most notably recruitment, appraisal, exit procedures and provision of references) to ensure and strengthen the quality of the senior leaders in their organisations and the wider system, and to identify and deal with issues of performance and behaviour.  This will on occasion (but not always) include action to remove someone from a senior role.  The government, the Care Quality Commission, the NHS Trust Development Authority and Monitor will continue to work with NHS Employers and other organisations with a responsibility for and an interest in these issues to ensure a focus on improving the way that existing mechanisms operate.  We believe that the focus for this issue should be the internal processes described above, and the Care Quality Commission’s registration requirements rather than the constitution of the foundation trust.

Update

The Department of Health has consulted on a new registration requirement that all directors of providers registered with the Care Quality Commission must meet a fit and proper person test. The Care Quality Commission will be able to insist on the removal of directors that fail this test. The consultation included how the revised fit and proper person requirement will work, and questions about the impact of the new regulations. The consultation ran from 27 March to 25 April 2014.The Fit and Proper Persons Test Regulations have been passed by Parliament and are in place in November 2014 for NHS organisations and from April 2015 for other organisations.