Banks to Vet Advisers by March

Banks offering financial advice will begin to share information about advisers with a history of poor conduct from the end of February and will also extend background checks to include bank employees.

The move was announced by the Australian Bankers Association (ABA) and follows an announcement in September 2016 of the development of a reference checking and information sharing protocol between financial advice providing members of the ABA.

The start date of 1 March 2017 was also flagged at the time but the ABA, in a statement outlining a number of initiatives as part of a new Better Banking program, stated the protocol would also extend to bank employees.

“This will build on banks’ existing recruitment practices by adding standardised questions on conduct background checks for prospective employees, and will be published in March,” the ABA stated.

“This will build on banks’ existing recruitment practices by adding standardised questions on conduct background checks…”

The protocol to check an adviser background sets minimum standards for checking references and sharing information through a series of standardised questions and record keeping practices.

AMP, ANZ Banking Group, Bendigo and Adelaide Bank, Commonwealth Bank, Macquarie Group, National Australia Bank, Suncorp Group, and Westpac had signed the protocol at the time of its release.

The ABA stated the Better Banking program would build on a number of initiatives announced in 2016 as well as consumer research into what was required to make banking better for the public.

As such the ABA stated it supported the financial adviser professional standards legislation currently before Parliament as well as industry funding by the banks to establish the new professional standards body.

The association would also advocate for the introduction of a new ‘last-resort’ compensation scheme for consumers who were found to have received poor advice from a financial adviser who had gone out of business or was unable to pay compensation.