The Australian Banking Association implemented the Banking Industry Conduct Background Check Protocol (“Protocol”) to allow banks access to more information on prospective Employees in order to prevent rogue employees seamlessly moving from bank to bank. The protocol complements the Financial Adviser Reference Checking & Information Sharing Protocol which was implemented in March 2017 in order to promote improved and thorough reference checking during the recruitment of financial advisers.
The protocol was implemented 1 July 2017 for all major banks and 1 October 2017 for all non-major banks resulting from incidents in the market.
Leading up to the introduction on the Protocol, the Australian Securities and Investments Commission (ASIC) banned 26 non-compliant financial advisers across the Big Four banks for misconduct. Amongst this, Westpac had advisers officially banned by ASIC, and National Australia Bank was under fire for financial planners allegedly incorrectly witnessing declarations on forms that authorise who gets a client’s superannuation if they die.
According to The Australian Banking Association, the purpose of the protocol is to:
Promote good conduct and ethical behaviour by formalising obligations for protocol Subscribers to ask a series of fact-based questions as part of the hiring process about whether the individual is subject to an ongoing Misconduct Investigation, or was dismissed or resigned in specific circumstances relating to Misconduct, so they can make their own informed recruitment decisions.
The full version of the protocol is available here.
All participating entities must subscribe to the protocol in writing to the Australian Bankers’ Association. The Protocol will operate between participating banks (“Subscribers”) only.
A list of Subscribers will be publicly available and maintained by the Australian Bankers Association. Approved contact points will be accessible to Subscribers and authorised agents, to ensure a streamlined process.
Key Details of the Protocol
- Subscribers must request the background information as part of their recruitment process. These requests are to be made on the final stage for prospective Employees only e.g. before or after an offer has been made;
- Participating banks must provide a response for any requests they receive for the background information. The Conduct Background Check questions must be answered correctly at the time the response is given. Subscribers providing a response do not have to respond to additional questions not part of the Conduct Background Check;
- Background checks can go back as far as 5 years (known as the request period);
- The protocol’s intention is to be included as part of Subscribers’ existing recruitment/background checking processes e.g. obtaining additional background information of the prospective Employee such as reference checking, experience, qualifications and police checks;
- Consent by the prospective Employee is required. The Hiring Employer must use the consent wording outlined within the protocol, or other consent wording agreed upon between the Subscribers. Evidence of consent must be supplied to the Former Employer providing the response;
- Hiring Employers and Former Employers are responsible for ensuring compliance with their obligations under Australian Privacy Principle 5;
APP 5 – Notification of the collection of personal information
APP 5 specifies certain matters about which an organisation must generally make an individual aware, at the time, or as soon as practicable after, the organisation collects their personal information.
In addition, APP 5 requires organisations to notify individuals about the access, correction and complaints processes in their APP privacy policies, and also the location of any likely overseas recipients of individuals’ information.
- There are record keeping and confidentiality obligations that all Subscribers must adhere to, set out within the protocol; and
- The protocol meets required legal privacy obligations to ensure all employee data is secure.
Conduct Background Check Questions
Prior to undertaking the Conduct Background Check, the Hiring Employer must provide the prospective Employee’s full name, previous name/s and date of birth.
The Former Employer must undertake any necessary enquiries or request additional information from the Hiring Employer in order to fully confirm the identity of the Employee before providing a response.
The Employment Verification requires the Hiring Employer to ask the potential Employee’s Former Employer a set of specific questions relating to potential previous misconduct.
PeopleCheck has a product in place to assist financial Subscribers with their protocol obligations.
For more information, please contact us via telephone on +612 4023 0603 or email at firstname.lastname@example.org.
- ABA Banking Industry Conduct Background Check Protocol – bankers.asn.au
- Australian Privacy Principles (Privacy Act 1988) – oaic.gov.au/privacy-law/privacy-act/australian-privacy-principles
The information contained in this publication is the opinion of PeopleCheck Pty Ltd and does not form the basis of legal advice.