The role of periodic rechecks in finance: best practices

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Jordie Black
January 11, 2024
Updated on:

For an industry characterised by trust and confidentiality, the importance of thorough background rechecks must be balanced in financial organisations. 

While FCA-regulated organisations conduct mandatory rechecks on all SMCR-eligible employees to secure operational integrity and uphold the highest standards of professional conduct, these measures must be extended to encompass all employees, irrespective of their roles.

Expanding the scope of background rechecks serves multiple purposes. It bolsters the organisation's internal security, enhances public confidence, and solidifies its reputation within the fiercely competitive financial sector. 

Trust and security

All employees will have undergone background checks before their post within a financial services organisation; however, what was accurate at the start of their employment might not hold after a few years. Situations change, impacting an employee's ability to handle sensitive information or financial transactions securely.

Although most employees are trustworthy and honest, continuous background rechecks provide a safety net against potential risks by identifying changes in behaviour or circumstances that could compromise security. 

Employee theft value in financial institutions

Recent data indicated that 18% of employee theft came from the finance industry, the highest amongst those surveyed. What's more, the losses are substantial for those organisations, exceeding $120 million on average

This data highlights the need for vigilant security measures, and regular background rechecks serve as one of the easiest and most effective solutions.

Employee theft in the finance industry

Enhancing public trust and confidence

Financial organisations operate in a highly competitive market where every decision is scrutinised by both regulators and customers alike. In such an environment, public trust is critical to maintaining a solid reputation and attracting clients. 

The public holds financial organisations to high ethical standards as they handle people's hard-earned money. By conducting comprehensive rechecks on all employees, including those in non-client-facing roles, organisations demonstrate their commitment to transparency and accountability. This approach gives customers peace of mind and acts as a deterrent against potential misconduct.

Recheck frequency within top HR teams

Strengthening the organisation's reputation 

Reputational damage can have far-reaching implications for financial organisations, even more than operational losses. Clients quickly switch providers if they lose faith in an organisation's ability to protect their assets and maintain ethical standards. 

A robust background recheck strategy that encompasses all employees safeguards against the risk of internal misconduct, which could lead to severe reputational damage. By regularly assessing employees' backgrounds, the organisation can identify and address potential risks before they escalate into damaging situations. 

As a result, this approach strengthens the organisation's reputation and solidifies its standing.

Balancing rechecks with the administrative burden

Balancing rechecks with administrative burdens is a challenge that many firms face. Conducting checks on all employees can be expensive and time-consuming, especially for bigger organisations. 

Due to this, some firms only perform mandatory checks, leaving them vulnerable to potential risks.

Background checks post-hire stats

In fact, while 93% of firms globally conduct background checks as part of a hiring process, ​​only about 1 in 5 employers conduct background checks post-hire. 

93% of firms conduct background checks

Leveraging technology for efficient background checks

The digital transformation, accelerated by the COVID-19 pandemic, has significantly altered practices, including employee background checks. Many organisations have begun to utilise digital platforms and technology tools to conduct these checks more efficiently. 

According to an EY report, 32% of organisations leveraged technology tools as an alternate mode of verification during the COVID-19 lockdown. These tools can digitise records, automate processes, and conduct preliminary assessments of employee credentials.

Benefits of digital background checks

The use of technology in background checks offers several advantages.

Speed and efficiency. Automated processes and digital platforms speed up the background check process, enabling quicker hiring decisions and reducing the administrative burden.

Comprehensive checks. Digital tools can conduct more thorough checks, covering various aspects relevant to the financial sector.

Flexibility and adaptability. Digital platforms allow background checks to be tailored according to different organisational roles and responsibilities, ensuring a more targeted approach.

Addressing negative background checks. Digital transformation also aids in navigating and responding to negative background checks. It can provide a more nuanced view of potential risks associated with new hires and help make informed decisions about employment offers.

Recommendations for implementation

Adopt a tailor-made approach. Customise the background check process for different levels and roles within the organisation.

Integrate with HR practices. Incorporate digital background checks into the broader framework of HR strategies, including hiring, onboarding, and training.

Prioritise data privacy and security. Ensure that the digital platforms used for background checks adhere to data protection regulations and maintain the confidentiality of personal information.

Implementing objective processes

Unless the employee is subject to mandatory checks under SMCR, implementing company-wide rechecks may feel invasive, creating a feeling of distrust amongst employees. Striking the right balance between security and privacy is crucial for successful implementation.

Organisations should establish objective processes in place that are transparent, fair, and consistent for all employees. These checks should be conducted periodically, regardless of an employee's role or position. 

This approach helps build trust and ensures that no employee feels targeted or singled out. It also conveys that the organisation is committed to maintaining a secure and ethical work environment.

Continual review and improvement of recheck programs

Ensuring an organisation's continued safety and security requires ongoing efforts to review and improve employment rescreening policies and procedures. To this end, it is essential to regularly assess the effectiveness of recheck programs, seeking employee feedback to identify improvement areas and ensure that best practices are being followed. 

Employee participation in the evaluation process can ensure that recheck programs remain relevant to the needs of the organisation and its personnel while also contributing to overall transparency and trust within the company.

Companies can help create a safer and more secure workplace for all by instituting regular reviews of these programs and soliciting employee feedback.

The benefits of periodic rechecks

In conclusion

Background rechecks are essential to maintaining security and trust in financial organisations. By including all employees in these checks, organisations safeguard against potential risks and enhance their reputation and public confidence. 

With the essential help of technology, these checks can be conducted efficiently and effectively while balancing the need for privacy and security. Implementing objective processes further strengthens the trust between employers and employees, leading to a stable and reliable workforce. 

As financial organisations evolve in an ever-changing landscape, prioritising background rechecks will remain crucial for maintaining a competitive edge and upholding ethical standards. 

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