Stricter background checks introduced for Australian banking employees

Alison Banney 13 June 2017 NEWS

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The Banking Industry Conduct Background Check Protocol will be implemented from 1 July 2017 and aims to promote good conduct and increase consumer confidence.

The Australian Bankers Association (ABA) has announced a new conduct background checking protocol allowing banks access to more background information on potential employees in a bid to prevent rogue bankers hopping from bank to bank.

Australia’s banking industry has been in the spotlight over the past year with increasing concerns about its toxic, sales driven culture that focuses more on commissions than helping bank customers.

In April last year Prime Minister Malcolm Turnbull told Australian banks they need to change their profit-driven culture during a speech at Westpac’s 199th birthday event. This sparked widespread calls for an official Royal Commission into the banking industry, which has yet to come to fruition.

Industry regulators and corporate watchdogs have implemented reviews into the banking sector, which have highlighted this sales-driven culture and identified many rogue financial advisers in the process.

Earlier this year the Australian Securities and Investments Commission (ASIC) banned 26 non-compliant financial advisers across the Big Four banks for misconduct and said there is still “further work to be done”.

The new background checking protocol

ABA chief executive Anna Bligh said the new Banking Industry Conduct Background Check Protocol was part of the industry’s transformation to make banking better for customers.

“Each bank has extensive, yet different, reference checking processes as part of hiring staff; so this will create more consistency in practices and mean anyone who does the wrong thing has nowhere to hide,” said Bligh.

“Banks already conduct police record checks, but this might not always uncover serious types of misconduct. Anyone who is guilty of a serious type of misconduct that breaches bank policy or has the potential to cause harm to customers has absolutely no place in the Australian banking industry.”

The new protocol will require banks to dig deeper into a potential employee's employment history, particularly if they were dismissed or resigned for customer misconduct.

The key details of the new protocol include:

  • Background checks can go back as far as five years
  • Participating banks must request the background information as part of their recruitment process
  • Participating banks must oblige any requests they receive for employee background information
  • Protocol will be implemented by 1 July 2017 for major banks and 1 October 2017 for non-major banks
  • The protocol meets the required legal privacy obligations, to ensure employee data is secure

Finance Sector Union of Australia against the new protocol

The Finance Sector Union of Australia (FSU) has expressed its concerns for the new protocol which targets "bad apples", saying it is unfair and lacks consistency.

“We don’t believe this policy will deliver procedural fairness to job applicants and there is no consistency across the banking industry about how the policy will be applied,” said FSU national secretary Julia Angrisano.

“We have told the banks, the ABA and other finance sector employers that the real problems in the industry stem from the breakdown in trust and confidence because of unfair targets and cost control, not bad apples. Our members simply don’t trust the industry to administer such a system fairly,” said Angrisano.

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