Financial Services: Employee Rescreening for Non-Regulated Roles
Steve Johnson, Global Head of Financial Services at HireRight, looks at a somewhat surprising impact of increased employee retention, how companies define risk within their existing workforce—and mitigate it—and the types of checks that are often conducted as part of an employee re-screen for UK financial services organisations.
This article was originally published on FT Adviser on November 28, 2024.
We can blame the ongoing post pandemic fallout, the geopolitical implications of what’s currently happening around the world, or the seemingly endless global economic downturn. One way or another, everyone has been affected and it’s most likely a potent combination of all these factors that seems to have created a perfect storm in the jobs market.
In this article, I’m going to look at a somewhat surprising impact of increased employee retention, how companies define risk within their existing workforce—and mitigate it—and the types of checks that are often conducted as part of an employee rescreen for financial services organisations.
The Retention Riddle
Whatever the cause, we have observed in the past year or so that among our financial services customers, more people are keeping their heads down and sitting tight in their current roles and/or companies. In fact, one of our customers reported that while they traditionally see annual attrition rates of up to 40%, right now they are sitting at just 5%. And they’re not alone—this is an industry-wide issue right now impacting financial services companies of various shapes and sizes.
This fundamental shift in employee retention habits is having an unusual knock-on effect. If around two-fifths of your workforce annually is being screened as they join the company, then your susceptibility to potential corporate, financial, and reputational risk is significantly reduced accordingly. However, if the vast majority of your people are now staying put for years—which ironically is probably what you are hoping for—you may well be opening yourself up to problems from your incumbent workforce. While your employees will have passed their pre-employment background checks when they first joined the company, they might have subsequently demonstrated character traits and behaviours that aren’t necessarily in line with current company requirements or standards.
And, of course, you should also consider the growing number of employees you might have inherited in what is traditionally a lively M&A sector. All of this only serves to underline the importance of rescreening your existing (or recently inherited) workers who may not have been screened for many years—and, indeed, just who you should be rescreening, which checks should be considered, and how often should employee rescreening take place.
Defining Risk
We know that there are certain FCA mandates when it comes to rescreening key senior and high-risk employees that work in regulated positions within the financial services sector. This is fine in those circumstances where the definitions are clear and there is consensus amongst organisations. However, when looking at the broader workforce outside of these regulated roles, many financial services organisations acknowledge the risks that these individuals may also pose to their company and have implemented a rescreening policy to help mitigate them.
As part of their rescreening programme for positions where rescreening isn’t mandated, many companies start by identifying high-risk roles—which are often judged by an employee’s access to information, their ability to grant access to others, and those who are authorised signatories—and typically rescreen these roles more often than lower risk positions.
We work with many of the world’s leading players in the financial services sector and their attitudes to risk when it comes to the rescreening of their staff vary enormously—especially in the UK when there is no specific FCA mandate for their non-regulated workers. For some of our customers, rescreening all their non-regulated roles every five years is seen as sufficient, while others with a lower risk appetite adopt a more robust and nuanced approach, screening key staff annually, medium-risk roles every three years, and low-risk positions every five years.
There isn’t a single agreed approach that organisations should follow when it comes to rescreening, although most financial services companies acknowledge the need for and value of having an appropriate rescreening programme in place—it just needs to be better defined. And with the FCA becoming increasingly vocal when it comes to taking a closer look at how organisations monitor employee behaviour, many of those are who already have an employee rescreening policy are now questioning whether those policies are appropriate and in line with best practice and the rest of the market.
Rescreening Checks
When it comes to what organisations consider rescreening their incumbent staff for, it’s unlikely to include all the checks that were initially conducted pre-hire. If you’re rescreening an employee after they have been with you for a year or more then you probably don’t need to double check their academic qualifications or employment history, as these are unlikely to have changed during their employment at your company. However, there could be other things that you should be aware of—usually taking place outside of the workplace—that may pose a risk and could have taken place since their initial pre-hire screening.
Typical rescreening checks conducted by financial services organisations might include criminal record and credit checks alongside a Global Sanctions and Enforcement Check (GSEC). Financial services employers might also include other checks that look more specifically at conduct and behaviour, such as an adverse media check (which essentially looks in the media for mentions of a person associated with negative content) and social media screening.
It comes with the territory; if you employ people, there’s always going to be risk. And people change, so no matter how comprehensive your original screening process is, things will have moved on, and that ideal candidate or employee may no longer be just that. So, whilst you will never be able to eliminate the risk, there’s certainly lots you can do to reduce the possibility and stack the odds in your favour.
To find out more about rescreening, you can download HireRight’s Global Guide to Rescreening or read HireRight’s blog post: Why Post-Hire Screening Could Reduce Talent Headaches.
Release Date: December 10, 2024
Steve Johnson
Steve Johnson is the Global Head of Financial Services at HireRight. He joined the HireRight team in 2009, and during his tenure has worked in a number of account management positions, including most recently as Director of Account Management, EMEA, overseeing HireRight’s customers in the financial services and professional services industries. During his time at HireRight, Steve supported many of HireRight’s biggest financial services customers in EMEA, and managed the migration programme for HireRight’s EMEA customers onto HireRight’s unified global platform.
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