The Hong Kong Monetary Authority (HKMA) recently released its Consultation Conclusions Paper (“Consultation Conclusions“) on Implementation of Mandatory Reference Checking Scheme (“MRC Scheme“) to Address the “Rolling Bad Apples” Phenomenon.1 The proposal will be implemented in two phases. In view of the feedback during the consultation process, the Consultation Conclusions have revised the scope of personnel to be covered in the MRC Scheme from the initial proposal. Modifications and refinements to certain operational details of the MRC Scheme, as well as the implementation timetable will be led by an Industry Working Group (IWG) to be established by the Hong Kong Association of Banks. We discuss the key aspects of the Consultation Conclusions and the employment ramifications in more detail below.
We summarise the currently proposed MRC Scheme as follows:
- What financial institutions will be covered under the MRC Scheme?
- Which personnel will be covered under Phase 1?
- Which additional personnel will be covered under Phase 2?
- What information will “reference providing AIs” need to provide to “recruiting AIs”?
- Will there be any further clarification of the scope of the information to be included in the reference?
- Will there be a standard form template to facilitate responses for the purposes of the MRC Scheme?
- What period of time will the MRC Scheme cover?
- How long will reference providing AIs have to respond to a request from a recruiting AI?
- What if there are difficulties for a reference providing AI providing information or a recruiting AI cannot obtain a response from a reference providing AI?
- Is there any enforcement mechanism to address failure by a reference providing AI to respond to requests?
- What if the individual refuses to consent or withdraws consent to the MRC process?
- Can an AI still employ prospective employees/continue to employ a recently hired individual after being informed of misconduct?
- Should prospective employees be informed of, and given an opportunity to respond to any negative information?
- Can AIs outsource the MRC process to external service providers?
Click here to access full alert.