Cross-sector conduct checks for banking, insurance
The Hong Kong Monetary Authority (HKMA) and the Insurance Authority (IA) have launched a Cross-sector Reference Checking Arrangement between the banking and insurance sectors. This initiative aims to prevent misconduct from following individuals changing jobs, with Phase 3A implementation set for July.
Two-way checks for financial conduct
The HKMA and the Insurance Authority (IA), in collaboration with industry associations, have jointly established the Cross-sector Reference Checking Arrangement.
This new initiative mandates banking and insurance entities to share conduct-related information on prospective intermediaries, covering the past seven years.
The arrangement operates in both directions, allowing checks from banking to insurance and vice-versa.
This marks a significant step towards preventing misconduct from persisting across sectors when individuals change jobs.
Phase 3A of the arrangement is scheduled for implementation in July, specifically targeting all life insurance intermediaries within both banking and insurance entities.
Preparatory work, including staff communication and internal process adjustments, is crucial for relevant banking entities to ensure readiness for this new regulatory framework.
The HKMA encourages continued industry support and collaboration for a smooth rollout and future expansions.
Catching the 'rolling bad apples'
The Cross-sector Checking Arrangement builds upon the success of Hong Kong's existing Mandatory Reference Checking Scheme (MRC Scheme), which has been instrumental in fostering a sound bank culture.
Launched in 2023, the MRC Scheme has significantly expanded its coverage from 3,500 senior staff to over 50,000 employees involved in securities, insurance, or MPF regulated activities, encompassing approximately half of the banking workforce.
By the end of 2025, around 2,800 reference checks had been completed under the MRC Scheme, with 29 cases involving negative information.
This 1% rate confirms the scheme's effectiveness in identifying potential 'bad apples' and underscores the importance of robust conduct oversight in the financial sector.