Speaking before the parliamentary joint committee on corporations and financial services on Friday, ASIC deputy chair Peter Kell said poor reference checking on the part of licensees was allowing dodgy advisers to circulate through the industry, causing headaches for the regulator.
“To be blunt, it’s been a source of very considerable frustration for ASIC for some time,” he said.
These comments follow similar remarks made by the regulator in March 2017, when ASIC warned it would take action against financial institutions if they failed to provide or obtain “meaningful references” before making new hires.
Mr Kell noted that the Australian Bankers’ Association is presently looking to develop protocols for reference checking, but added that these protocols should be applied to all involved in the delivery of financial services.
“Our view is that that, frankly, should extend across the entire industry,” he said.
“We’ve had that discussion with the ABA it shouldn’t be some exclusive ABA thing, because that would only get you part of the way there – so that that sort of thing doesn’t happen.”
Lee-Martin Seymour, chief executive of reference checking technology firm XREF, told ifa that such protocols should look overseas for inspiration.
“This is actually being discussed in the UK right now, and it’s no different over there,” he said.
Mr Seymour said the UK mandates a time-based approach to referencing, requiring candidates to provide references for their employment over the previous three years.
“There’s no point giving a reference that was worth one year between 2014 and 2015, it’s just not up-to-date and not relevant, so you’ve got to take a sample of history for that candidate, and the best way to do that is to say we need to cover three years of referencing,” he said.
“That might be nine references, it might be two, but you need to qualify your last three years of your professional existence.”
I hope ASIC reads this!
When a good adviser chooses to leave a crap dealer group because it is run by idiots (and there are so many), is it a surprise that the reference check will be bad and the adviser will get screwed over? Equally, is it a surprise that a dealer group will be perfectly happy when an idiot adviser wants to leave them because they are not getting what they want and give a good reference check to see the back of them? ASIC lack any commercial sense of how the real world works and live in a bureaucracy of lazy administrators who need press headlines to justify their existence so they come up with this. It is both funny and sad.
What ASIC fails to understand is that if you give a honest reference check which is negative the licensee and/or employer can be sued by the ex employee. Also terms are often negotiated between licensees and advisers upon departure which restrict the licensee from what can be said in a reference. Is this right? No but that’s what happens when lawyers are given the green light to sue anyone, regardless of if the ex adviser did the wrong thing or not.
Good lord !!! What a bunch of dolts occupy ASIC. ASIC is full of public servants. Public servants apply for promotion, and prospective employers ask for references. The system is a joke, and its constantly abused. Departments wanting to play “pass the parcel” with an intransigent employee heap praise on the departing employee. If they prefer to retain the employee, references are a little un-enthusiastic. The whole reference system is flawed, anywhere, any time. A dealer is unlikely to say an adviser is “a crook ” because it reflects on that licencee.
I think ASIC has too much time on its hands.