What the new reference-checking rules mean for you 

Alex Burke,  Senior Writer,  No More Practice Education

ASIC has outlined its protocol regarding adviser reference-checking by licensees - here's what it means for the industry.

From October 1st, licensees will need to take "reasonable steps" to obtain a reference when considering employment or authorisation of a prospective representative. These steps include seeking written consent by the prospective representative to request a reference and then asking for a reference using the following criteria:

  • Background information (such as the prospective representatives' previous role and responsibilities) 
  • Compliance audits
  • Conduct (such as any breaches that were either caused by or contributed to by the prospective representative) 
  • Unresolved matters (such as any unresolved inquiries or in-progress investigations that involve the prospective representative) 

The referring licensee, when requested, must provide this information within 10 business days unless both parties agree to a longer period (up to a maximum of 30 days). Additionally, the referring licensee must have employed or authorised the prospective representative within the last five years. 

A prospective representative, by the way, is defined by ASIC as: 

  • a current or former representative of a referee licensee who has engaged in financial advice or mortgage broking activity for the referee licensee and is seeking to act in the same capacity for a recruiting licensee
  • a current or former representative of a referee licensee who has engaged in other activities for the referee licensee (e.g. general customer service, para-planning, collections, bank-teller activities) and is seeking to become a financial adviser or mortgage broker
  • a current or former financial adviser representative of a referee licensee who is seeking to become a mortgage broker representative
  • a current or former mortgage broker representative of a referee licensee who is seeking to become a financial adviser representative, and
  • a licensee in their own right who is seeking to become a financial adviser or mortgage broker representative. 

According to ASIC, this protocol will "promote better information sharing about the performance history of financial advisers and mortgage brokers—focusing on compliance, conduct and risk management."


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