Boardroom Morality and the ‘Fit and Proper’ Test: An Aristotelian Perspective

This chapter argues that Aristotle’s character-based ethics are immanent in the regulatory frameworks of the UK financial services industry; and that questions of character can never be entirely removed from the regulator’s assessment of a person’s suitability to work in it. It proposes some Aristotelian methods by which this factor can be taken into account. The ‘Fit and Proper Test’ is a cornerstone of the UK’s approach to regulating the industry. Only people who pass a test can hold certain senior roles and responsibilities. While most of the test concerns empirically measurable matters, such as compliance with professional standards and legal codes, it retains an element of character judgement—applicants need to have honesty and integrity. Aristotle provides the definitive account of how individual ethics derive from character. This chapter argues that he also provides practical guidance for contemporary financial regulators, as they seek to prevent unethical behaviour.