Consumers Should Be Served by Fit and Proper Representatives in the Financial Services Industry
We refer to Mr Vincent Khoo's letter (Why are companies demanding employee's credit reports?, 21 November 2019). It is entirely appropriate for financial institutions (FIs) to assure themselves that their employees and representatives providing financial services to customers are in good financial standing.
MAS requires FIs to conduct due diligence checks to ensure that their employees and representatives who serve customers are fit and proper. Financial soundness is one of the fit and proper criteria, along with honesty, integrity and reputation, as well as competency and capability. Regulators in other jurisdictions such as the United Kingdom and Hong Kong apply similar criteria that include financial soundness.
Representatives of FIs transact for customers and some provide financial advice. Considerable trust is placed on them by both customers and the FIs they represent. It is relevant for FIs to consider if their representatives are of good financial standing. FIs minimally ascertain that the representative is not an undischarged bankrupt. FIs may also conduct additional checks such as requesting representatives to provide credit information from the credit bureaus or, as Mr Khoo has highlighted, monitor if representatives have outstanding unsecured loans exceeding certain thresholds. MAS does not prescribe specific thresholds of indebtedness or the frequency of periodic checks, but we consider such checks by FIs appropriate.
Mr Khoo also asked if it is against the Personal Data Protection Act 2012 (PDPA) for an employer to obtain an employee's credit report. Under the PDPA, organisations are required to notify individuals and obtain their consent for the collection, use and disclosure of personal data for appropriate purposes. Requesting representatives to provide a copy of their credit reports for conducting due diligence checks is considered an appropriate purpose in the context of employment where financial soundness is required. It is not a breach of the PDPA.
Ensuring that representatives of FIs are in good financial standing is important for maintaining a high level of trust and confidence in our financial industry.
Director (Corporate Communications)
Monetary Authority of Singapore
Source: Monetary Authority of Singapore