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Employers in the banking sector must comply with tough new requirements as part of major regulatory reform. What impact will this have on how HR deals with references? Sarah Ozanne explains.
A new banking regime came into force in March 2016, introducing major regulatory reform for those in the sector, with the aim of making banks and those that run them more accountable.
One area which has yet to take effect is the proposed changes to references provided for those who work in the sector. HR functions within banks will need to undertake a major overhaul of their policies and procedures on references to make sure they are compliant.
At present, it is common practice for employers to provide an outgoing employee with a bland standard form reference, simply confirming role and dates of employment. This has enabled those with a poor conduct history to move around in the financial services sector reasonably unchecked.
To address this, industry watchdogs the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have proposed new rules which require relevant firms and insurers to request a reference from a candidate’s previous employers covering the preceding six years of their employment. References must also be provided in a specific format.
This requirement applies to people going into certain categories of role, including those in the senior management and certification regimes. It also means that an employer may be required to seek a reference from anoth