ASIC Releases Adviser Reference Checking Obligations


ASIC has released the new rules around adviser reference checking and information sharing, designed to improve reference checking across the financial advice and mortgage broking sectors.

Released as a set of protocols, these new obligations stem from Banking Royal Commission Recommendations 1.6 (Consumer lending) and 2.7 (Professional discipline of financial advisers), and are included within the Financial Sector reform (Hayne Royal Commission Response) Act 2020.

Commencing from 1 October 2021, ASIC states these reforms are intended to promote better information sharing about the performance history of financial advisers and mortgage brokers, focusing on three key areas of:

  • Compliance
  • Conduct
  • Risk management

To assist AFSL holders and other entities who may be required to undertake reference checking or information sharing, the regulator has published a detailed information sheet (INFO 257), together with an example of a completed template reference request for a financial adviser,

ASIC notes the Banking Royal Commission found that “…AFS licensees were not doing enough to communicate between themselves about the background of prospective employees.”

To address these issues, the regulator references the Banking Royal Commission recommendation that AFS licensees undertake reference checking and information sharing for financial advisers to the same effect of the Australian Banking Association’s Reference Checking and Information Sharing protocol:

Banking Royal Commission Recommendation 2.7, addressing ‘Professional discipline of financial advisers’