legislation financial services background checks

Market Updates, Trends, Best Practice – 2018 into 2019

International background screening

  • The overriding trend in 2018 was a focus on international background checking.
  • Australia made it to number six on the HSBC’s annual Expat Explorer League Table list of the top 10 for most popular countries to work abroad in.  Our neighbour New Zealand came in at number two.
  • Australian organisations are now more than ever hiring personnel either originally from an international location or who have lived, worked or studied abroad. With technology and travel, along with globalisation in business becoming almost mainstream, any background checking program must be re-evaluated. Consideration to cover all countries relevant to the candidate’s background, not just Australia, is essential.

We explored the importance of globalisation and international screening in our 2018 article Incorporating International Background Checking – let’s get started!

Australia following US in background checking trends

  • The National Association of Professional Background Screeners (NAPBS) is the only internationally recognised industry body for background checking. Although initially developed out of the advanced US market, 2018 saw the NAPBS taking further steps to go global, with a taskforce established to create a truly global organisation. With our Managing Director as Chair of the APAC Chapter and member of this taskforce, we have a front-row seat for these exciting developments and look forward to sharing the benefits with you.
  • NAPBS research in 2018 indicated that 96% of companies in the US undertake some kind of background check on new employees. The screening industry in the US is so established that there are some companies specialising in a particular industry or geographical area. This is far from the status of our Australian market, which is still maturing. At the recent NAPBS APAC Chapter AGM, it was estimated that the number of organisations running checks looks more like 15-20% in most APAC countries, including Australia.

International Legislation

It all started with the news of Cambridge Analytica and Facebook.

To re-cap this in one long sentence: A third party (Kogan) gathered then sold the information of 50 million Facebook users to voter-profiling company Cambridge Analytica without their consent – who then used the information to make 30 million “psychographic” profiles, which gave them the tools needed to make targeted online adverts. (This is said to have impacted Brexit “Leave” campaign, the 2016 presidential campaign of Ted Cruz, and the 2016 Trump campaign.)

  • Then the GDPR landed.
  • This created a worldwide impact across various industries, including background checking, that deal daily with personal information. Key changes that impacted Australian organisations included: how consent is given and can be withdrawn; the Right to be Forgotten; cross-border disclosure; and obligations on Processors of data.
  • We as individuals are now more aware than ever of our online presence and our personal information. We want to know where our data is stored, how it is being used, who can see it, how it is protected and when is it destroyed, plus we now have more options and choices for providing and withholding consent.
  • Cloud-based data storage for businesses has become more common, which in turn has also prompted a closer look at how data is secured.

Our 2018 article on GDPR Compliance in Background Checking explains more.

Royal Commission into Banking, Superannuation and Financial Services Industry

Not to be outdone by the GDPR, compliance became the flavour of the year!

Quick re-cap:

  • Most well-known Australian financial organisations were put under the spotlight, and many compromising scenarios were uncovered (breaches of the Corporations Act, criminal and civil misconduct, non-compliance, outrageous charges plus much more).
  • Regulators ASIC & APRA took a beating! ASIC & APRA were both criticised for a lack of supervision and not enforcing regulations. Issues that arose included failure to ban individuals or enforce penalties such as fines against financial advisors.

The financial services industry is one of the most heavily regulated in Australia when it comes to background checking, with screening required by ASIC and APRA for responsible officers, advisors and responsible persons. The outcome of the Royal Commission saw many of our clients in the industry re-assess their screening needs by reviewing existing packages, implementing re-screening programs and reviewing arrangements with their suppliers for best practice.

Final Report: Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, February 2019.

Notifiable Data Breaches Scheme

Came into effect 22 February 2018

Established by the passage of the Privacy Amendment (Notifiable Data Breaches) Act 2017.

  • This scheme is relevant to any organisation with an existing obligation under the Privacy Act 1988 (Cth) and includes an obligation to notify individuals whose personal information is involved in a data breach that is likely to result in serious harm. The notification must include recommendations about the steps individuals should take in response to the breach.
  • The Australian Information Commissioner must also be notified of eligible data breaches.

The Office of the Australian Information Commissioner (OAIC) has already acted on a number of breaches such as Ticketmaster and Family Planning NSW. The activities of the OAIC continue to keep data security top of mind.

ACIC New Terms of Service

Came into effect 1 July 2018

Quick Re-cap:

The Australian Criminal Intelligence Commission (ACIC), the government agency through which police checks are undertaken, issued a new agreement for all accredited agencies that access their services. The agreement made key changes in the interest of public safety that aimed to improve the detection of fraudulent activity, give greater assurance as to the legitimacy of a police check result and increase the protection of applicants’ personal information. This made a significant impact on the way Police Checks are undertaken in Australia.

ASX Screening

2018 saw PeopleCheck being recommended in the ASX Listing Rules Guidance Note 1 as one of three acceptable brokers for international background checks that are required for directors of listing entities. This is evidence of yet another way that international background checking is creeping into everyday business in Australia!

Case Study – BE v Suncorp

People in all industries were talking about this 2018 case where the Australian Human Rights Commission (AHRC) made recommendations against Suncorp (employer) in favour of a candidate in a case of alleged discrimination based on criminal record.

Suncorp undertook a background check on the candidate pre-employment which revealed that the candidate had been convicted of using a carriage service to access child pornography material and possession of child pornography for which he was ordered to serve 12 months in prison. The candidate also failed to comply with reporting obligations that related to the first charge.

Suncorp’s decision not to employ the candidate led to the candidate pursing action for discrimination before the AHRC. The AHRC ruled in favour of the candidate, making a number of recommendations. However, Suncorp did not act on the recommendations. The case and the actions of Suncorp divided offices nationwide!

Read the full case details here.

Discrimination on the basis of a relevant criminal record

  • The outcome of the BE v Suncorp case has fast-tracked changes to the Australian Human Rights Commission Regulations 1989 to clarify that an employer can dismiss or not employ an individual based a “relevant” criminal record, rather than the current obscure term “inherent requirements of the role”.

Amendment to guidelines coming: ETA October 2019 (we’ll keep you posted).


  • The world is moving fast when it comes to technology. Automation, integration, Artificial Intelligence (AI) and machine learning are buzz words in all industries, including the background checking industry.
  • Automation and AI algorithms will continue to improve background checking, ultimately reducing timeframes and complexity; however, we must not forget the importance of the “human touch”. In an industry that is all about people who cannot always be defined by an algorithm, the human element retains important aspects in the screening process such as compliance with discrimination legislation and handling checks on a case-by-case basis depending on the candidate’s unique background.

In 2018 we released our first automated product – VirtualRefCheck

Other things we’ll be keeping an eye on in 2019

  • Impacts of Australia signing up to the APEC Cross Border Privacy Rules System
  • Upcoming: Royal Commission into Aged Care Quality and Safety
  • The Gig Economy
  • Re-Screening
  • Social Media Screening in the Australian market
  • Tenant Screening

The information contained in this publication is the opinion of PeopleCheck Pty Ltd and does not form the basis of legal advice.

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