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Referencing/Due Diligence

There seems to be an issue in the market place at present with regards to adviser and appointed representative referencing. I couldn’t understand until recently why no-one seems to give references, well not to the extent that they are of any use.

I have always been brave or stupid enough, as the case may be, to give a true reflection of the individual when I receive a reference request. I feel as an industry that we should all stick together on this as, at the very least, we have a care of duty to the public if not to future employers/networks to ensure that any cowboys cannot trade within an industry that we all cherish.

Although, having said this, I have lost existing ARs to other networks without receiving any reference request until after they have been registered, so maybe due diligence is not that important when your playing the AR numbers game.

I raised my concerns with the FSA when they made a recent visit to discuss our recruiting process and gave them an example of a reference I had received from a major insurer. With the broker in question, in this instance, we were unable to offer them a position as we couldn’t satisfy due diligence. This was due to the fact that the reference we received only confirmed that the individual had been employed between certain dates. The FSA agreed that this was unacceptable.

Giving an honest reference has come back to haunt me in the past as I’ve had a number of employers/networks asking me if I mind if they make the reference available to the person in question to discuss. I had believed that giving a reference was done so in the strictest confidence but, according to the Information Commissioner, under the Data Protection Act I must make my references available to the former employee in question if requested.

I have even had an ex-broker write to me to say they didn’t agree with the reference I had given and could I sign an amended reference, written by the broker himself which he said gave a truer reflection of him. As I stressed to this broker I have nothing to gain by giving them a bad reference, in fact I have a lot to lose as they will have unearned liability which I will have to carry.

So the dilemma is do I continue to give an in-depth reference or do I cop out and be non-committal? The question is, do we really want these difficult individuals in our industry? Let’s be honest they inevitably cost a lot of money. So let’s unite and do us all a favour and banish these individuals to double-glazing or some such ‘industry’ where they belong.


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