UK wants five-year references for bankers to prevent them covering up past misconduct

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 yesterday, ditching an earlier proposal for a longer period.

The first batch of rules on such references, published by the Bank of England’s Prudential Regulation 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 Bank of England proposed a six-year period.

“This is a new requirement which reflects a long standing 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.

Reuters