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ASIC seeks feedback on proposed reference-checking rule

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    The Australian Securities and Investments Commission has announced the release of a consultation paper seeking feedback on a new reference-checking and information-sharing protocol for financial advisors and mortgage brokers.

    The Financial Services Royal Commission recommended mandating reference checks for financial advisors and mortgage brokers after finding that financial services licensees were not doing enough to communicate amongst themselves about the backgrounds of prospective employees, according to ASIC. The government accepted that recommendation and, on 12 November introduced the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 into Parliament. The bill would obligate Australian financial services licensees and Australian credit licensees to comply with an ASIC reference-checking and information-sharing protocol.

    ASIC has developed a draft protocol that sets out obligations for licensees related to undertaking reference checks on those seeking to be employed or authorised as a financial advisor or mortgage broker. The agency has also prepared a draft information sheet to help licensees understand their obligations with regard to reference checking and information sharing.

    The draft protocol and information sheet have been prepared based on the current bill, ASIC said. The agency said that it would make necessary changes to the protocol should the bill be amended by Parliament.

    ASIC is now consulting on both the draft protocol and the accompanying information sheet through Consultation Paper 333 (CP 333), Implementing the Royal Commission recommendations: Reference checking and information sharing.

    ASIC said that industry and other interested stakeholders can provide feedback on CP 333 until 29 January.

    “ASIC will consider the feedback and finalise the ASIC Protocol and information sheet before the new reference checking and information sharing obligations in the Bill commence on 1 October 2021,” ASIC said in a release.

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