LONDON (Reuters) - Financial firms hiring senior staff will need references going back a minimum of five years to prevent bankers covering up past misconduct, the Bank of England said on Monday, ditching an earlier proposal for a longer period.
The first batch of rules on such references, published by the BoE’s Prudential Regulation Authority, in conjunction with the Financial Conduct Authority, come into force on March 7.
The aim is to ensure that formal, detailed references are obtained for hiring people to roles like non-executive directors and senior managers at banks and insurers.
The reform was recommended by the Fair and Effective Markets Review from the government and regulators to stop “rolling bad apples” from hiding a poor conduct record by moving jobs.
A bank must provide a reference “as soon as reasonably practicable”, containing “all relevant information” of which it is aware, the new rules said.
A firm must take “reasonable steps” to obtain appropriate references covering at least the past five years of services. Last year’s consultation by the BoE proposed a six-year period.
“This is a new requirement which reflects a longstanding supervisory expectation that firms should undertake appropriate due diligence on candidates,” the new rules state.
References should be “accurate and based on documented fact”, which can include “frank and honest views, but only after taking reasonable care both as to factual content, and as to the opinions expressed, and verifying the information upon which they are based,” the rules state.
The new rules do not cover two proposals included in last year’s consultation paper: a requirement for the references to be provided in a standard format, and for them to be updated if subsequent information about conduct later comes to light.
A further batch of rules, which may address some of these issues, will be released at a later day, the BoE said.
Reporting by Huw Jones; Editing by Keith Weir