In the financial sector, where trust and confidentiality are paramount, ensuring ongoing employee integrity is crucial.
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 continuous background screening serves multiple purposes. It bolsters the organisation's internal security, enhances public confidence, and solidifies its reputation within the fiercely competitive financial sector.
Why continuous background screening is essential for financial security
All employees will have undergone background checks before their post within a financial services organisation; however, an employee’s circumstances can change over time. Situations change, impacting an employee's ability to handle sensitive information or financial transactions securely.
Regular rechecks help identify changes such as:
- Financial distress that could lead to fraud or misconduct
- Undisclosed criminal activity or regulatory violations
- Conflicts of interest that may compromise ethical standards
Although most employees are trustworthy and honest, continuous post-hire background checks provide a safety net against potential risks by identifying changes in behaviour or circumstances that could compromise security.
A recent report by Hiscox reveals that 18% of employee theft incidents occur in the financial industry — the highest among all sectors surveyed. What's more, the losses are substantial for those organisations, exceeding $120 million on average, underscoring the need for proactive security measures.
This data highlights the need for vigilant security measures, and regular background rechecks serve as one of the easiest and most effective solutions.
How post-hire background checks enhance public trust
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 continuous background 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.
Strengthening the organisation's reputation through continuous background screening
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 is a key component of risk management in financial businesses. 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 in the industry.
Overcoming challenges in post-hire background checks
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 post-hire checks, leaving them vulnerable to potential risks.
In fact, recent data suggests that 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.
Leveraging technology for efficient background rechecks
The digital transformation, accelerated by the COVID-19 pandemic, has significantly altered verification practices, including employee background checks. Many organisations have begun to utilise digital platforms and technology tools to conduct these checks more efficiently.
These tools automate and simplify the process, enabling quicker assessments, better accuracy, and reduced administrative burdens, all while ensuring compliance with industry regulations.
Benefits of digital post-hire background checks
The use of technology in continuous background screenings offers several advantages:
- Speed and efficiency: Automated processes and digital platforms speed up the background recheck process, reducing the administrative burden.
- Comprehensive coverage: Digital tools can conduct more thorough checks, tailored to financial regulations.
- 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 helps you navigate and respond to negative background checks. It can provide a more nuanced view of potential risks, and help you make informed decisions.
Running fair post-hire background checks
While security is top priority, financial firms must balance continuous background screening with employee trust and privacy. To avoid concerns over fairness, organisations should:
- 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. Leveraging HR technology and automation ensures that background checks are conducted efficiently while safeguarding sensitive employee information.
Implementing an objective and transparent post-hire process
Unless the employee is subject to mandatory checks under SMCR, implementing company-wide background 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 post-hire 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 policies
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 background 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 create a safer and more secure workplace by instituting regular reviews of these programs and soliciting employee feedback.
Final thoughts on continuous background screening for financial organisations
Continuous background screening is 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 post-hire rechecks will remain crucial for maintaining a competitive edge and upholding ethical standards.
FAQs
1. Are post-hire background checks legal?
Yes, but they must comply with data protection regulations such as GDPR in the UK/EU and FCRA in the US. Employers must obtain employee consent, be transparent about their screening policies, and ensure that all checks are conducted fairly and without discrimination.
2. How often should financial organisations conduct background rechecks?
The frequency of post-hire background checks varies depending on industry regulations and company policies. Some firms conduct annual or biennial checks, while others implement real-time monitoring for high-risk roles. A risk-based approach is often the most effective strategy.
3. What are the key differences between pre-employment and post-hire background checks?
Pre-employment background checks assess a candidate’s history before hiring. Post-hire background checks monitor employees over time to detect changes that may pose risks to the organisation. While pre-employment checks are standard, continuous background screening ensures long-term security and compliance.
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