The Monetary Authority of Singapore (“MAS“) will be imposing requirements on financial institutions (“FIs“) to conduct and respond to reference checks on a minimum set of standardised information. Salient proposed requirements include:
(a) Scope of FIs subject to mandatory reference check requirements
MAS intends to apply these requirements to various FIs regulated by MAS, including capital market licensees, banks, and insurers, amongst others.
(b) Scope of employees subject to mandatory reference check requirements
Employees subject to mandatory reference checks will be aligned with the scope of relevant functions subject to MAS’ harmonised and expanded power to issue prohibition orders under the Financial Services and Markets Act 2022. These include individuals who perform functions relating to the handling of funds or assets, risk taking, risk management and control, or critical system administration. MAS will adopt a risk-based approach to require reference checks only on senior managers and material risk personnel performing such relevant functions.
(c) Minimum mandatory information
FIs will be required to conduct and respond to reference checks. There will be a prescribed list of mandatory information to be provided in the reference check, including information on the individual’s employment history, compliance records, balanced scorecard grades and persistency ratio (where applicable). FIs will be required to respond to reference check requests within 21 calendar days.
(d) Lookback period
The reference check will minimally cover the individual’s work experience in the past five years, consistent with the proposed reference check lookback requirement for representatives.
(e) Right to view
At this point in time, MAS has decided not to mandate the right of individuals to view the references, but reminds FIs that references should be factual and objective.
Implementation
The requirements will be set out in Notices, and MAS will be consulting on the draft Notices in due course. MAS will provide a transitional period of one year from the issuance of the Notices.
Background
In May 2021, MAS issued a Consultation Paper with its proposals to require FIs to conduct reference checks and respond to reference check requests on employees, based on a set of minimum mandatory information within a specified period of time (“Consultation Paper“). To read more, refer to our Legal Update titled “MAS Proposes Mandatory Reference Checks for Representatives & Certain Employees of Financial Institutions“. MAS issued its Response to feedback received on the Consultation Paper on 12 December 2023.
