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Industry figures have said that mandatory reference checking could raise professional standards – but it could also backfire on brokers.
ASIC warned in its submission to the Financial System Inquiry that poor reference checking by the financial services industry was allowing “bad apples” to find new jobs even after their unprofessional behaviour had been exposed.
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The regulator said the problem could be solved if proper reference checks were made compulsory.
Century 21 Home Loans chief executive James Green said although ASIC had good intentions, brokers would be placed in a difficult position if they were forced to adopt such a scheme.
Mr Green told The Adviser that it would be difficult to conduct official checks on candidates from banks, because the big banks refuse to provide references.
He said brokers could then be accused of privacy violations if they tried to find other ways to vet candidates.
Mr Green said Century 21 Home Loans had a confidential reference checking system that it wanted to keep private from ASIC to stop candidates finding out how it could be bypassed.
Astute Sydney City Central director Moshe Moses said his business always does thorough checks when people apply for jobs.
However, he added that it would be unfair to impose a mandatory scheme on brokers unless it was also made compulsory for all other industries.
Shore Financial director Theo Chambers backed the idea of mandatory reference checking as a way to raise industry standards.
He told The Adviser that Shore speaks to previous employers and requests a police check before hiring anyone.
Jeremy Fisher from 1st Street Home Loans also supported a mandatory reference checking scheme.
He said the Sydney firm conducts comprehensive background checks because some aggregators are so focused on expansion that they have low recruitment standards.
AFG’s general manager of sales and operations, Mark Hewitt, said AFG has a very strict screening process.
Mr Hewitt said the aggregator conducts licence checks, Veda checks and police checks. Less emphasis is placed on the referees provided by candidates, because they will usually only nominate positive referees, he added.
“If we have any doubts after that, we will make enquiries with our industry contacts,” he told The Adviser.
