The banking and insurance sectors welcome the cross-sector arrangement for checking employees’ references, saying the new initiative will bring synergy that will improve the overall professionalism of the financial services industry in the Hong Kong Special Administrative Region.

The Hong Kong Monetary Authority and the Insurance Authority on Wednesday announced the cross-sector reference checking arrangement between the banking and insurance sectors.

Replying to China Daily enquiry, the Hong Kong Association of Banks said in a Thursday statement: “HKAB fully supports the arrangement which reflects a collaborative industry-wide effort in promoting a culture of integrity and sound conduct across Hong Kong’s financial service industry. We will continue to work closely with the HKMA and the IA to ensure its smooth and effective implementation.”

Before launching the cross-sector reference checking arrangement, the insurance industry implemented a background check program for insurance intermediaries in 2024, said Selina Lau Pui-ling, executive director of the Hong Kong Federation of Insurers.

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In a local radio program on Thursday, Lau said she believes the new arrangement will achieve synergy and help improve the overall professionalism of the financial services sector.

The HKFI executive director added that conducting joint background checks jointly by the banking industry and the insurance segment will not be very difficult, as there is not much staff movement between the two sectors.

Lau said she expects that this arrangement can be expanded to insurance practitioners engaged in business other than life insurance, such as motor insurance and travel insurance.

The first phase of the arrangement, to be implemented in July, will cover 110,000 life insurance agents employed by all banks and insurance companies in the city. Through the agreement mechanism, banks and insurance organizations can share conduct-related information on prospective employees over the past seven years, enabling cross-industry background checks "from banks to insurers, and from insurers to banks".

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The HKMA and the IA will review the effectiveness of the first phase arrangement to prepare for expansion in the next stage.

“I urge the industry to prepare thoroughly before implementation, strengthening communication with employees to be covered and other stakeholders, providing employee training, and optimizing recruitment processes to ensure a smooth and orderly rollout of the arrangement,” HKMA Deputy Chief Executive Arthur Yuen Kwok-hang said at the Wednesday industry event, held to share insights on best practices and preparations for the cross-sector arrangement.

The IA said in a LinkedIn post: “This initiative enables banks and insurance entities to share conduct-related reference information about prospective hires, helping to prevent the ‘rolling bad apples’ phenomenon,” referring to hiring individuals with a history of misconduct.

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“Such collaboration is a testament to the concerted efforts of regulators and the industry in upholding market integrity, and we will continue to explore further expansion going forward”, the post said.

Before rolling out the cross-sector employee background check plan, the city’s banking sector has launched its mandatory employee background check program.

The program initially covered about 3,500 senior-level employees in its first phase in 2023, and significantly expanded to about 50,000 employees engaged in securities, insurance, or Mandatory Provident Fund-regulated activities in the second phase by 2025, representing more than half of the total workforce of all banking institutions in the city.