Vocational education and training (VET) employees face high expectations around conduct, leadership, and accountability. These expectations shape how organisations operate. They also help organisations make decisions that protect learners and the public.
Regulations explain that decision-makers within VET need to be fit and proper persons. But what does this mean? Understanding the responsibilities decision-makers carry helps organisations stay aligned with regulatory expectations. It also enables them to avoid the risks that come from weak oversight or poor judgment.
In this guide, we’ll explore:
- What the term ‘fit and proper person’ means in a regulatory context
- Why it matters for VET quality and public confidence
- How regulators define and enforce the requirements
- Who must meet these expectations within an RTO
- Proper person assessment criteria and influencing factors
- How the Standards for RTOs 2025 reinforce these requirements
- Practical steps RTOs can take to manage risk
- Common issues that affect suitability
What Does “Fit and Proper Person” Mean in Australian VET?
A fit and proper person is an individual who demonstrates honesty, reliability, and responsible conduct. Their behaviour shows they can be trusted to act lawfully and uphold the standards expected in a regulated environment.
Australian regulators apply this definition when reviewing Registered Training Organisation (RTO) registrations and renewals. VET providers need to submit proper person declarations and documentation for decision-makers within the organisation. Regulators then review this information to determine whether the RTO meets the relevant requirements.
Why Being a Fit and Proper Person Matters for RTOs
Protecting Learners and Public Interest
RTO decisions affect learners, industry, and the wider community. When influential individuals act with integrity, they build confidence in the training environment. Their sound judgment ensures it remains safe and trustworthy. Their conduct helps protect learners from harm and maintains confidence in the sector.
Maintaining the Quality
Quality in the VET sector depends on strong leadership and responsible oversight. Individuals who meet fit and proper expectations help prevent malpractice and fraud. They also reduce the risk of substandard delivery. Their behaviour supports systems that maintain accurate and consistent training and assessment. Those systems also ensure alignment with industry standards.
Ensuring Good Governance
Governance relies on people who understand their responsibilities and act with accountability. Fit and proper individuals strengthen internal controls, decision-making processes, and organisational stability. Their approach promotes transparency. It also reduces the likelihood of errors or poor judgment affecting the organisation.
Reducing Regulatory Risk
Regulators expect influential individuals to meet suitability requirements. When they do, the organisation is less likely to face sanctions. They’re also not likely to face increased monitoring or regulatory intervention. Meeting these expectations supports a stable compliance position. It also reduces the risk of serious consequences for the RTO.
Who Needs to Be a Fit and Proper Person?
CEOs and High Managerial Agents
These individuals oversee daily operations and hold responsibility for compliance. Their decisions influence how the organisation functions and how it meets its obligations. Regulators expect them to demonstrate suitable conduct and sound judgment.
RTO Owners, Directors, and Persons With Decision-Making Power
People who guide the organisation’s strategy or finances must meet suitability expectations. Their influence shapes the direction of the RTO. Fit and proper person assessments determine whether these individuals can support lawful and responsible operations.
Individuals Considered to Have Significant Control
Anyone who can shape key decisions, direct staff, or affect the organisation’s conduct and governance. This is whether or not that person holds a formal role. These may include:
- Shadow Directors. These individuals influence decisions without holding an official title. Their involvement can affect operations and compliance.
- Advisors or consultants with high influence. External parties who guide compliance, financial matters, and operational planning. Their advice can shape decisions that affect regulatory obligations.
- Financiers or investors with decision-making power. When financial backers influence management or strategic decisions, their suitability is relevant. Regulators assess their involvement to ensure their conduct does not create risk for the organisation.
- Silent partners with operational input. People who are not listed in the corporate structure but participate in decision-making. Their influence over operations makes their suitability important.
- Any person identified as exerting substantial influence. Regulators can assess any individual who shapes the organisation’s conduct, even if they do not hold formal authority.
Who is Responsible for Fit and Proper Person Requirements?
Fit and proper person expectations are created in legislation. They are then applied through regulatory decisions about RTO registration and renewal.
- Australian Parliament and the Minister for Skills and Training. Set the legislative framework for national VET regulation. They approve the instruments that contain the Fit and Proper Person Requirements.
- Department of Employment and Workplace Relations (DEWR). Develops VET regulatory policy, and drafts. DEWR maintains the Standards for RTOs and associated Fit and Proper Person Requirements. They also advise the Minister on any changes they deem necessary.
- Regulators. Apply the requirements when deciding whether to grant, renew, or maintain registration. They take regulatory action where key people are not fit and proper. These regulators include the Australian Skills Quality Authority (ASQA) and the Victorian Registration and Qualifications Authority (VRQA).
Fit and Proper Person Requirements in Australia
Compliance with Law
Looks at a person’s history with criminal and civil law. Regulators want to understand whether there have been legal findings that raise concern about the person’s suitability to be involved in an RTO. ASQA considers whether the person has been:
- Found guilty of an offence under Commonwealth, state or territory law
- Ordered to pay a pecuniary penalty (a court-ordered financial penalty for breaching the law)
- Found guilty of a foreign offence as defined in the Crimes Act 1914
Management History
Regulators examine a person’s management history in regulated education. They also look at the history in related funding arrangements. They review whether past decisions and roles support confidence in the person’s ability to manage an RTO responsibly. ASQA may consider whether the person has been involved in:
- Cancellation, suspension, revocation, or rejection of RTO registration or an application for registration or renewal
- Loss or refusal of approval as a VET Student Loans or Higher Education Support Act provider
- Cancellation, suspension, or termination of subsidy funding arrangements with a state or territory
- Breaches of conditions of registration, approvals, or funding contracts
- Involvement as a manager or director of a higher education or ESOS provider during periods of significant non-compliance
- Disqualification from managing corporations under the Corporations Act
Financial Records
Regulators review financial records to understand how individuals have managed their own financial affairs. They also look at any entities they have been involved with. Financial distress or poor financial conduct can raise concern about whether the person can support a stable and viable RTO.
ASQA considers whether the person has:
- Been insolvent or bankrupt
- Taken steps to obtain relief under laws for bankrupt or insolvent debtors
- Compounded with one or more creditors
- Assigned remuneration for the benefit of one or more creditors
- Been under external administration
- Held outstanding debts to the Commonwealth
Provision of Information
Focuses on how a person deals with regulators and government bodies. Regulators consider whether the person has knowingly provided false or misleading information or withheld key facts. This applies to circumstances where they could be expected to understand their obligations. It may look at dealings with:
- A VET regulator
- The Tertiary Education Quality and Standards Agency
- The TPS Director
- The Minister, relevant departments, or their delegates
- State or territory bodies responsible for subsidy funding
Previous Conduct and Involvements
Regulators consider a person’s broader conduct and history in education. This helps them identify patterns of behaviour over time, not just isolated incidents. It may look at whether the person has previously been found not to be a fit and proper person under the:
- National Vocational Education and Training Regulator Act
- Australian Education Act 2013
- Education Services for Overseas Students Act 2000
- Higher Education Support Act 2003
- Tertiary Education Quality and Standards Agency Act 2011
- VET Student Loans Act 2016
- State or territory subsidy funding arrangements for education
Public Confidence
Focuses on how the person’s involvement in an RTO is likely to be viewed by learners, industry, and the wider community. Regulators consider public confidence in the person, and how that would affect the organisation. It applies specifically to organisations that provide, assess, or issue nationally recognised qualifications.
This requirement recognises that the VET sector relies on trust. Even when legal or regulatory thresholds are not crossed, concerns about a person’s reputation, conduct, or associations can still arise. Those concerns can affect confidence in the organisation. They can also affect confidence in the qualifications it issues.
How the Standards for RTOs 2025 Support ASQA’s Fit and Proper Person Requirements
The Standards for RTOs 2025 embed fit and proper expectations within a wider framework for outcomes, compliance, and governance.
For NVR Registered Training Organisations, the detailed fit and proper requirements appear in two key locations:
- Schedule 1 of the Compliance Standards, which sets out the Fit and Proper Person Requirements.
- Part 4 of the Outcome Standards, which focuses on governance and accountability of key people.
How RTOs Can Ensure Their Key People Are Fit and Proper
1. Conduct Thorough Background Checks
You need enough information about key people to decide whether they are suitable to hold influence in your RTO. Focus your checks on matters that link to specific requirements.
You can:
- Request criminal history checks where lawful and appropriate
- Search for past regulatory action or sanctions involving education providers
- Check company and directorship records for disqualifications or repeated failed entities
- Ask targeted questions about insolvency, bankruptcy, and serious civil findings
2. Use Strong Governance Structures
You also need structures that control how influence is exercised in your RTO. Clear governance makes it easier to see who is responsible, how decisions are made, and who is accountable when something goes wrong.
You can:
- Define roles for governance, management, and compliance in writing
- Set documented delegations so it is clear who can make decisions in specific cases
- Require regular reporting on compliance, risk, and financial performance
3. Monitor Changes Over Time
Fit and proper status is not a one-off check. You need to monitor whether your key people remain suitable as their circumstances change.
You can:
- Require senior people to declare relevant changes, such as new charges, regulatory action, insolvency, or disqualification
- Build a simple annual declaration process that confirms whether anything has changed
- Review roles and delegations when concerns arise, including limiting or removing authority if needed
4. Provide Compliance Training for Senior Personnel
Your senior people need to understand the regulatory environment they operate in. Without that, even well-intentioned leaders can make decisions that put your registration at risk.
You can:
- Provide targeted training on ASQA’s regulatory approach, fit and proper person requirements, and the Standards for RTOs 2025
- Include governance, risk, and reporting obligations in induction for executives, owners, and high managerial agents
- Refresh this training when standards change or when you update your internal policies
5. Maintain Transparent Communication With Regulators
You need to be open and timely in how you communicate with regulators. Silence, delay, or partial disclosure can create more risk than the underlying issue itself.
You can:
- Tell ASQA or VRQA promptly when there are changes to key people, ownership, or control in your RTO
- Disclose relevant legal, financial, or regulatory events that may affect a person’s fit and proper status, rather than waiting for regulators to discover them
- Keep your registration details, contact information, and scope of registration up to date
- Respond to requests clearly and completely, and correct any errors as soon as you identify them
Common Issues That Can Affect Fit and Proper Status
Non-Disclosure of Past Events
Fit and proper problems often start with what is not disclosed. Failing to declare criminal, financial, or regulatory history can be more damaging than the event itself. It suggests a lack of honesty and can quickly erode regulators’ confidence in the person and the organisation.
Associating With High-Risk Individuals
Ongoing relationships with banned, disqualified, or non-compliant individuals carry risks for your RTO. Even if those people have no formal role, frequent consultation or influence may suggest poor judgment or weak governance. Regulators may see these associations as a sign that the RTO does not manage risk effectively.
Repeated Governance Failures
Isolated mistakes can occur in any organisation. Repeated failures in decision-making, oversight, or meeting basic obligations are a warning sign. They point to deeper governance problems. Patterns such as late reporting, unmanaged conflicts of interest, or repeated breaches of conditions signal deeper issues. They can undermine confidence in the people leading the RTO.
Financial Mismanagement
Serious or repeated financial problems can affect how regulators view a person’s suitability. These can include insolvency, unpaid public debts, or failing to meet key financial commitments. Persistent instability raises concern about the individual’s financial management. It also raises concerns about whether they can support a viable RTO and protect learners from business failure.
