Representatives from the banking and insurance sectors on Thursday welcomed the new cross-sector arrangement for employee reference checking, saying the initiative will help improve professionalism and integrity across Hong Kong’s financial services industry.

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

In response to a China Daily inquiry, the Hong Kong Association of Banks expressed its full support for the arrangement, describing it as an industry-wide effort to promote integrity and sound conduct. “We will continue to work closely with the HKMA and the IA to ensure its smooth and effective implementation,” the association said.

The program followed the mandatory employee background checks introduced in Hong Kong’s banking sector in 2023. By 2025, these checks have expanded to cover about 50,000 employees, accounting for more than half of the total workforce across banking institution.

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Similarly, from 2024, background checks were also implemented for insurance intermediaries.

Selina Lau Pui-ling, executive director of the Hong Kong Federation of Insurers, said she believes the new arrangement will create synergy and help improve the overall professionalism of the financial-services sector.

She added that conducting joint background checks should not be very difficult, as there is limited employee movement between the two sectors.

Lau said she expects this arrangement to expand to insurance practitioners engaged in businesses other than life insurance, such as motor insurance and travel insurance.

The first phase of the arrangement, starting 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 will be able to share conduct-related information on prospective employees over the past seven years, enabling cross-industry background checks.

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The two authorities will review the effectiveness of the initial-phase arrangement and consider future expansion.

“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 an industry event on Wednesday.

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The Insurance Authority said in a 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.

“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 added.

Contact the writers at oswald@chinadailyhk.com