The Australian Securities and Investments Commission (ASIC) and five industry groups are working together to improve how the financial services industry recruits advisers and to limit the ability of ‘bad apples’ to move within the sector.

ASIC and five peak industry bodies have formed a consultation panel to look at how industry obtains and uses references for engaging employees and other representatives as advisers, to help remove ‘bad apples’ from the industry.

The panel will specifically consider how to:

• improve practices for reference checking within the financial services industry
• identify any barriers to the provision of appropriately candid, factually based references, and
• identify practical measures to enhance the referencing process.

‘Reliable, candid references play an important role in reducing the potential for “bad apples” (poor quality or dishonest advisers) to either move within or remain in the financial services industry’, said Mr Greg Tanzer, ASIC’s Executive Director, Consumer Protection and International Relations.

‘Australian financial services licensees must operate efficiently, honestly and fairly. This includes properly checking that any new staff they employ don’t have a history of negligence or dishonesty in providing financial services.

‘ASIC is working with industry to raise the standard of conduct by advisers. This is an important initiative as part of our focus to ensure that the new financial services regime delivers good consumer protection outcomes’, said Mr Tanzer.

The panel has representatives from ASIC, the Financial Planning Association, the Investment and Financial Services Association, the Securities & Derivatives Industry Association, the National Insurance Brokers Association, and the Australian Compliance Institute.