Powerchex Warns of the Consequences of CV Embellishment. This is our most recent press release following another case where the courts got serious about lies on CVs and a major UK employer learned a lesson in retrospective screening. Read on.
A senior NHS Human Resources manager who exaggerated her qualifications has been given a six-month suspended prison sentence and ordered to pay nearly £10,000 compensation.
The individual in question was found to have made the claims when her Trust merged with another in 2006: staff were asked to submit expressions of interests for new posts, and she made a series of misrepresentations in an attempt to obtain alternative employment.
She last week pleaded guilty to six counts of fraud by false representation at Exeter Crown Court. As well as the fine, she must also carry out 150 hours of unpaid community work. The conviction follows an investigation by the NHS Counter Fraud Service.
Alexandra Kelly is the Managing Director of city pre-employment firm, Powerchex. Kelly has considerable experience of similar situations and is well aware of the repercussions that CV embellishment can have on both in the individual and the company affected.
“Jobseekers should be aware of the perils of being caught lying on their CV or any other documentation used in order to gain employment. More and more employers are outsourcing their pre-employment screening to professional firms with the tools and experience to uncover CV embellishments or even outright fabrications. While this particular situation is unusual in its severity, most employers will look to terminate if they get wind that you have misrepresented yourself at any stage of the hiring process.”
Perhaps even more saliently, employers need to be aware of the reputational damage CV embellishment can cause to their company, especially if information comes to light after the individual has already started their employment. “Sadly it is no longer enough for firms to simply ask their employees to sign a declaration stating that any information supplied about themselves is true,” continues Kelly. “Like the above situation, such incidences can gain bring considerable negative exposure, with associated financial and reputational consequences. Firms must make clear to their potential employees that the information they provide during the recruitment process will be subject to relevant checks, and that employment is conditional upon verification of all information supplied. Unfortunately, the risks are now too great not to err on the side of caution.”
Tuesday 22 December 2009
Friday 4 December 2009
Criminal checks, the FSA, and Approved Persons - Do you have it right?
For the longest time, HR departments in the City have debated as to whether the FSA requires criminal checks. Often, they decide not to do them and they leave it up the the applicant to disclose any criminal history on their FSA form A. Finally, the FSA has revealed a clear policy. City firms are responsible for doing CRB checks on their approved persons. So, if you are still on the fence, read on:
_____________________________________________________________________
Powerchex Warns of the Risk of Insufficient Background Checking
after The FSA takes Action
Insurance Brokerage Firm penalised for failing to conduct basic checks
London, 3rd December 2009. The Financial Services Authority has banned two insurance
brokers for colluding to conceal a criminal conviction. The FSA also cancelled permission for an Insurance Brokerage firm to carry on regulated activities.
Margaret Cole, the FSA’s director of enforcement and financial crime, said:
“We have made examples of [these parties] to send a warning to firms and
individuals: do not lie to the FSA. This case, and others that are due to follow, serve as a clear signal about the consequences of giving anything less than full and frank disclosure of material information to the FSA.”1
Alexandra Kelly, a director of pre‐employment screening firm at Powerchex, believes that the Insurance brokerage firm engineered its own downfall; “The FSA is explicit that it expects firms to conduct checks on individuals applying to work in controlled functions. This unsurprisingly includes criminal record checks as standard. Had the firm in question conducted such checks, the FSA would have had no cause to take such drastic action.”
In this particular case, one of the brothers had applied for a controlled function having recently been convicted of conspiracy to defraud. On his FSA application, he signed a declaration that he had no previous criminal convictions, and was not the subject of any current criminal proceedings. His brother helped conceal the conviction from the FSA, despite occupying a regulated role himself and knowing the risks this involved.
“Sadly it is no longer enough for firms to simply ask their employees to sign a declaration stating that they do not have any criminal convictions,” continues Kelly. “Especially for those individuals applying for controlled functions, it is critically important that relevant identity,credit and criminal record checks are conducted as an absolute minimum. In this particular case, failure to do so has resulted in the cancellation of permission from the FSA to carry out regulated activities. I think this ruling will cause a lot of firms to sit up and take notice.”
_____________________________________________________________________
Powerchex Warns of the Risk of Insufficient Background Checking
after The FSA takes Action
Insurance Brokerage Firm penalised for failing to conduct basic checks
London, 3rd December 2009. The Financial Services Authority has banned two insurance
brokers for colluding to conceal a criminal conviction. The FSA also cancelled permission for an Insurance Brokerage firm to carry on regulated activities.
Margaret Cole, the FSA’s director of enforcement and financial crime, said:
“We have made examples of [these parties] to send a warning to firms and
individuals: do not lie to the FSA. This case, and others that are due to follow, serve as a clear signal about the consequences of giving anything less than full and frank disclosure of material information to the FSA.”1
Alexandra Kelly, a director of pre‐employment screening firm at Powerchex, believes that the Insurance brokerage firm engineered its own downfall; “The FSA is explicit that it expects firms to conduct checks on individuals applying to work in controlled functions. This unsurprisingly includes criminal record checks as standard. Had the firm in question conducted such checks, the FSA would have had no cause to take such drastic action.”
In this particular case, one of the brothers had applied for a controlled function having recently been convicted of conspiracy to defraud. On his FSA application, he signed a declaration that he had no previous criminal convictions, and was not the subject of any current criminal proceedings. His brother helped conceal the conviction from the FSA, despite occupying a regulated role himself and knowing the risks this involved.
“Sadly it is no longer enough for firms to simply ask their employees to sign a declaration stating that they do not have any criminal convictions,” continues Kelly. “Especially for those individuals applying for controlled functions, it is critically important that relevant identity,credit and criminal record checks are conducted as an absolute minimum. In this particular case, failure to do so has resulted in the cancellation of permission from the FSA to carry out regulated activities. I think this ruling will cause a lot of firms to sit up and take notice.”
Friday 27 November 2009
Data Security and Data Privacy Laws are not the same worldwide
Ogilvy Renault, a Canadian law firm released the following article which explores the differencies in data security and data privacy rules, depending on the juristiction. It is really useful background information for any company that works with personal and/or sensitive data across boarders.
________________________________________________________
04 November 2009
Article by Christine Carron and Martha A. Healey
The protection of personal information is an important issue as business operations become increasingly global in nature. Coupled with the Internet enabling personal data to be distributed almost instantaneously across the globe, privacy has quickly become a critical international concern that can often be confusing due to a global patchwork of laws and regulations. A US organization conducting business in multiple foreign jurisdictions must be aware privacy laws are not equal everywhere. Unless the most restrictive regulatory regime is adopted, country by country procedures may be necessary.
CANADA
Canada While Canada is often assumed to be similar to the US with respect to business practices, privacy regulation is another matter. The Canadian approach to confidentiality and the transfer of personal information is much more in line with the European model than that of the US. (It was, in fact, designed to be this way.) The federal personal information protection regime in the Canadian private sector is mainly governed by the Personal Information Protection and Electronic Documents Act (PIPEDA), which became effective in 2004 and extends privacy protection to all personal data collected by companies on individuals in the course of commercial activity, except employees other than those of a federal undertaking. It follows that, in most cases, personal information of employees is regulated by applicable provincial law. Only Alberta, British Columbia and Quebec have enacted privacy legislation. That provincial legislation, however, is substantially similar to PIPEDA. Ontario has enacted privacy legislation but only with regard to personal health information.
It is important to note that when transferring personal information outside of Canada, the transferring organization has an obligation to provide a comparable level of protection meaning the level of protection provided by the third party must be comparable to the level of protection afforded the personal information within Canada. The Privacy Commissioner of Canada has ruled that, not withstanding the USA PATRIOT Act, personal information transferred to the US can benefit from protection similar to that enjoyed in Canada. She added, however, that notice must be given to individuals alerting them to the fact their information will be stored in the US where it becomes subject to the USA PATRIOT Act.
Another recent, high-profile example involved Facebook, the hugely popular social networking site. On July 16, 2009, Canada's Privacy Commissioner ruled that Facebook was in breach of Canadian privacy laws on several fronts, particularly with respect to the circumstances surrounding consent to the disclosure of personal information to third party application developers and the retention of personal information of users who had closed their accounts. Initially, Facebook resisted complete compliance with the Privacy Commissioner's recommendations. However, given the Commissioner's ability to submit the matter to the courts, Facebook ultimately proposed solutions satisfying Canadian privacy laws.
As Facebook learned, a "global" approach to privacy works only where the privacy policy is written so as to comply with all jurisdictions in which an organization does business. Facebook recently indicated that it plans to amend worldwide practices to implement Canadian privacy requirements globally.
Another recent example illustrating this is the case of Abika.com, a US-based online data broker. On July 31, 2009, after a nearly five-year investigation, the Privacy Commissioner ruled Abika had violated Canadian privacy laws by disclosing the personal information of Canadians without their knowledge or consent to third parties.
EUROPE
The EU has developed a very sophisticated personal information protection regime with stringent standards that has influenced the adoption of privacy laws throughout the world. Directive 95/46 sets out the general principles with regard to the processing of personal information, which are now implemented in the national law of every EU member state. The underlying principles of Directive 95/46 were largely based on those of international bodies, like the OECD's Guidelines on the Protection of Privacy and Transborder Flows of Personal Data.
The EU's privacy legislation closely resembles that of Canada, however, how this legislation is interpreted can lead to some surprising differences, particularly with respect to the validity of consent given to the collection, use and disclosure of personal information.
Consent is in the lynchpin of Canadian privacy legislation. In the EU Directive, persons from or about whom data is collected must unambiguously grant their consent before such data is collected, after having been informed about the purpose(s) for which the data will be used. The interpretation of the validity of consent may impact a US business processing personal information of European customers or employees. For example, relying on employee consent to the collection of certain personal information can prove to be difficult since some European countries question whether that consent is "freely given" given the desire to be employed or to keep employment.
Another key tenet of the EU privacy directive is that it prohibits the transfer of personal information to non-EU countries, including the US, unless those countries provide adequate protection for the information. While the US has not been, officially, deemed to provide adequate protection, the two jurisdictions are negotiating so as to facilitate normal business relations. The Safe Harbor Agreement allows US companies to avoid sanctions imposed by the EU if they voluntarily embrace a somewhat less stringent version of the EU privacy directive.
THE REST OF THE WORLD
Once you move out of Canada and Europe, all bets are off with respect to the extent that privacy legislation exists or is enforced. In many jurisdictions there is no one law or regulatory framework governing privacy. Instead, laws or regulations relating to privacy are often found as a sub-set of sector-specific or constitutional laws.
Asia-Pacific: Regions that have recently adopted privacy legislation include Australia, Hong Kong, Japan, Macao, New Zealand, South Korea and Taiwan. China, Malaysia, the Philippines and Thailand are currently in the process of drafting legislation. Indonesia, Singapore, Vanuatu and Vietnam only have privacy provisions in sector-specific laws. Still, many Asia-Pacific regions do not have privacy legislation, including Brunei, Cambodia, Laos, Myanmar and the majority of the small Pacific island countries.
India: India does not have comprehensive privacy laws in place. The right of privacy is not expressly recognized in the Constitution of India, although the Supreme Court of India has implied it from article 21 of the Constitution, which states that, "No person shall be deprived of his life or personal liberty except according to procedure established by law." However, this right is not absolute and can be restricted under procedures established by law or if a superior interest commands it. Laws that do exist relate to the privacy of data held by public financial bodies (e.g. banks) and electronic data (the Information Technology Act of 2000). India is moving to bring their privacy laws in step with Europe and other jurisdictions. The Personal Data Protection Bill, based primarily on foreign privacy legislations, was introduced in 2006 and is currently still pending.
Latin America: Currently, very few Latin American regions have any privacy legislation and there is no cohesive framework for the region. However, the importance of a harmonized privacy legal framework for the region has been recognized and many countries in this region are currently working on developing it.
CONCLUSION
Although efforts are underway in many regions to harmonize legislation, privacy laws around the world still differ in many respects. Outside of Canada and Europe, privacy legislation is either non-existent or a patchwork of sector-specific laws and regulations. US organizations conducting business in these regions should use the most stringent legislation as the lowest common denominator in order to establish an effective privacy policy.
About Ogilvy Renault
Ogilvy Renault LLP is a full-service law firm with close to 450 lawyers and patent and trade-mark agents practicing in the areas of business, litigation, intellectual property, and employment and labour. Ogilvy Renault has offices in Montréal, Ottawa, Québec, Toronto, and London (England), and serves some of the largest and most successful corporations in Canada and in more than 120 countries worldwide. Find out more at www.ogilvyrenault.com.
________________________________________________________
04 November 2009
Article by Christine Carron and Martha A. Healey
The protection of personal information is an important issue as business operations become increasingly global in nature. Coupled with the Internet enabling personal data to be distributed almost instantaneously across the globe, privacy has quickly become a critical international concern that can often be confusing due to a global patchwork of laws and regulations. A US organization conducting business in multiple foreign jurisdictions must be aware privacy laws are not equal everywhere. Unless the most restrictive regulatory regime is adopted, country by country procedures may be necessary.
CANADA
Canada While Canada is often assumed to be similar to the US with respect to business practices, privacy regulation is another matter. The Canadian approach to confidentiality and the transfer of personal information is much more in line with the European model than that of the US. (It was, in fact, designed to be this way.) The federal personal information protection regime in the Canadian private sector is mainly governed by the Personal Information Protection and Electronic Documents Act (PIPEDA), which became effective in 2004 and extends privacy protection to all personal data collected by companies on individuals in the course of commercial activity, except employees other than those of a federal undertaking. It follows that, in most cases, personal information of employees is regulated by applicable provincial law. Only Alberta, British Columbia and Quebec have enacted privacy legislation. That provincial legislation, however, is substantially similar to PIPEDA. Ontario has enacted privacy legislation but only with regard to personal health information.
It is important to note that when transferring personal information outside of Canada, the transferring organization has an obligation to provide a comparable level of protection meaning the level of protection provided by the third party must be comparable to the level of protection afforded the personal information within Canada. The Privacy Commissioner of Canada has ruled that, not withstanding the USA PATRIOT Act, personal information transferred to the US can benefit from protection similar to that enjoyed in Canada. She added, however, that notice must be given to individuals alerting them to the fact their information will be stored in the US where it becomes subject to the USA PATRIOT Act.
Another recent, high-profile example involved Facebook, the hugely popular social networking site. On July 16, 2009, Canada's Privacy Commissioner ruled that Facebook was in breach of Canadian privacy laws on several fronts, particularly with respect to the circumstances surrounding consent to the disclosure of personal information to third party application developers and the retention of personal information of users who had closed their accounts. Initially, Facebook resisted complete compliance with the Privacy Commissioner's recommendations. However, given the Commissioner's ability to submit the matter to the courts, Facebook ultimately proposed solutions satisfying Canadian privacy laws.
As Facebook learned, a "global" approach to privacy works only where the privacy policy is written so as to comply with all jurisdictions in which an organization does business. Facebook recently indicated that it plans to amend worldwide practices to implement Canadian privacy requirements globally.
Another recent example illustrating this is the case of Abika.com, a US-based online data broker. On July 31, 2009, after a nearly five-year investigation, the Privacy Commissioner ruled Abika had violated Canadian privacy laws by disclosing the personal information of Canadians without their knowledge or consent to third parties.
EUROPE
The EU has developed a very sophisticated personal information protection regime with stringent standards that has influenced the adoption of privacy laws throughout the world. Directive 95/46 sets out the general principles with regard to the processing of personal information, which are now implemented in the national law of every EU member state. The underlying principles of Directive 95/46 were largely based on those of international bodies, like the OECD's Guidelines on the Protection of Privacy and Transborder Flows of Personal Data.
The EU's privacy legislation closely resembles that of Canada, however, how this legislation is interpreted can lead to some surprising differences, particularly with respect to the validity of consent given to the collection, use and disclosure of personal information.
Consent is in the lynchpin of Canadian privacy legislation. In the EU Directive, persons from or about whom data is collected must unambiguously grant their consent before such data is collected, after having been informed about the purpose(s) for which the data will be used. The interpretation of the validity of consent may impact a US business processing personal information of European customers or employees. For example, relying on employee consent to the collection of certain personal information can prove to be difficult since some European countries question whether that consent is "freely given" given the desire to be employed or to keep employment.
Another key tenet of the EU privacy directive is that it prohibits the transfer of personal information to non-EU countries, including the US, unless those countries provide adequate protection for the information. While the US has not been, officially, deemed to provide adequate protection, the two jurisdictions are negotiating so as to facilitate normal business relations. The Safe Harbor Agreement allows US companies to avoid sanctions imposed by the EU if they voluntarily embrace a somewhat less stringent version of the EU privacy directive.
THE REST OF THE WORLD
Once you move out of Canada and Europe, all bets are off with respect to the extent that privacy legislation exists or is enforced. In many jurisdictions there is no one law or regulatory framework governing privacy. Instead, laws or regulations relating to privacy are often found as a sub-set of sector-specific or constitutional laws.
Asia-Pacific: Regions that have recently adopted privacy legislation include Australia, Hong Kong, Japan, Macao, New Zealand, South Korea and Taiwan. China, Malaysia, the Philippines and Thailand are currently in the process of drafting legislation. Indonesia, Singapore, Vanuatu and Vietnam only have privacy provisions in sector-specific laws. Still, many Asia-Pacific regions do not have privacy legislation, including Brunei, Cambodia, Laos, Myanmar and the majority of the small Pacific island countries.
India: India does not have comprehensive privacy laws in place. The right of privacy is not expressly recognized in the Constitution of India, although the Supreme Court of India has implied it from article 21 of the Constitution, which states that, "No person shall be deprived of his life or personal liberty except according to procedure established by law." However, this right is not absolute and can be restricted under procedures established by law or if a superior interest commands it. Laws that do exist relate to the privacy of data held by public financial bodies (e.g. banks) and electronic data (the Information Technology Act of 2000). India is moving to bring their privacy laws in step with Europe and other jurisdictions. The Personal Data Protection Bill, based primarily on foreign privacy legislations, was introduced in 2006 and is currently still pending.
Latin America: Currently, very few Latin American regions have any privacy legislation and there is no cohesive framework for the region. However, the importance of a harmonized privacy legal framework for the region has been recognized and many countries in this region are currently working on developing it.
CONCLUSION
Although efforts are underway in many regions to harmonize legislation, privacy laws around the world still differ in many respects. Outside of Canada and Europe, privacy legislation is either non-existent or a patchwork of sector-specific laws and regulations. US organizations conducting business in these regions should use the most stringent legislation as the lowest common denominator in order to establish an effective privacy policy.
About Ogilvy Renault
Ogilvy Renault LLP is a full-service law firm with close to 450 lawyers and patent and trade-mark agents practicing in the areas of business, litigation, intellectual property, and employment and labour. Ogilvy Renault has offices in Montréal, Ottawa, Québec, Toronto, and London (England), and serves some of the largest and most successful corporations in Canada and in more than 120 countries worldwide. Find out more at www.ogilvyrenault.com.
Friday 20 November 2009
The FSA presents it's agenda for fighting economic crime
In a speech to the British Bankers' Association, Margaret Cole, Director, Enforcement and Financial Crime Division, FSA, highlighted the FSA's agenda for fighting economic crime. She touched on a range of issues; here are some highlights of interest to HR:
"We are the gatekeeper of the UK financial system. Firms or individuals wishing to operate in the UK must meet our 'fit and proper' standard. Those who don't, stand to be rejected during our authorisation, approval or change of control processes. There are numerous aspects to fitness and properness – competence, integrity and the ability to establish the right culture and tone at the top are important features.
A murky past, a reputation for unscrupulous business methods or sailing close to the wind will also call fitness and properness into question. Applications from countries where personal histories are obscure or controverted, or corruption is endemic in business life, add to the challenge.
We address these challenges by building stronger links with overseas law enforcement and regulatory agencies, by devoting more people and resources to the cases that call for heightened due diligence and, above all, as you would expect from an intrusive regulator, by a sceptical, questioning approach that does not shy away from making decisions that will be contested. In this we are aided by the fact that the burden of proof is on the applicant to satisfy us of their integrity. That puts us in a strong legal position to take robust decisions, and we have been doing so.
People seeking to bypass the FSA as gatekeeper can expect little sympathy. In September this year we brought our first prosecution against an individual for acquiring a controlling interest in a regulated firm without giving the FSA prior notice and for making false and misleading statements – and we obtained a conviction. A second prosecution is under way.
But we don’t or shouldn’t perform the gatekeeper function in isolation – we do expect authorised firms to work with us in the fight against financial crime and to assist us in keeping undesirable companies and individuals away from UK authorised firms and their customers."
On data security she stated:
"And data security is another area where we can, and will, use enforcement action to support the work of our supervisors. We expect firms to consider how their actions or failures leave others open to the threat of fraud. We continue to learn of data security lapses that put customers’ personal information at risk. This summer’s enforcement action against three units of HSBC saw substantial fines paid for weak controls over the security of customer data. And we will follow up with further enforcement cases to demonstrate the importance of this subject."
"We are the gatekeeper of the UK financial system. Firms or individuals wishing to operate in the UK must meet our 'fit and proper' standard. Those who don't, stand to be rejected during our authorisation, approval or change of control processes. There are numerous aspects to fitness and properness – competence, integrity and the ability to establish the right culture and tone at the top are important features.
A murky past, a reputation for unscrupulous business methods or sailing close to the wind will also call fitness and properness into question. Applications from countries where personal histories are obscure or controverted, or corruption is endemic in business life, add to the challenge.
We address these challenges by building stronger links with overseas law enforcement and regulatory agencies, by devoting more people and resources to the cases that call for heightened due diligence and, above all, as you would expect from an intrusive regulator, by a sceptical, questioning approach that does not shy away from making decisions that will be contested. In this we are aided by the fact that the burden of proof is on the applicant to satisfy us of their integrity. That puts us in a strong legal position to take robust decisions, and we have been doing so.
People seeking to bypass the FSA as gatekeeper can expect little sympathy. In September this year we brought our first prosecution against an individual for acquiring a controlling interest in a regulated firm without giving the FSA prior notice and for making false and misleading statements – and we obtained a conviction. A second prosecution is under way.
But we don’t or shouldn’t perform the gatekeeper function in isolation – we do expect authorised firms to work with us in the fight against financial crime and to assist us in keeping undesirable companies and individuals away from UK authorised firms and their customers."
On data security she stated:
"And data security is another area where we can, and will, use enforcement action to support the work of our supervisors. We expect firms to consider how their actions or failures leave others open to the threat of fraud. We continue to learn of data security lapses that put customers’ personal information at risk. This summer’s enforcement action against three units of HSBC saw substantial fines paid for weak controls over the security of customer data. And we will follow up with further enforcement cases to demonstrate the importance of this subject."
Friday 13 November 2009
Employee fraud; should we be re-checking current employees?
FSA fines and bans former UBS employee for helping conceal unauthorised trading losses
This is a case of a trusted, current employee who betrayed their employer and caused them untold grief, loss of reputation and financial penalties. Andrew Cumming, a former client adviser at the London branch of UBS AG (UBS), was fined and banned by the FSA for his role in the activities that led to the firm receiving an £8 million fine earlier this month for systems and controls failings.
According to the FSA's press release "Cumming has been fined £35,000 and prohibited from performing any regulated function for a minimum period of five years on the grounds that he is not fit and proper.
Paperwork signed by Cumming, who worked in UBS’ international wealth management business, helped to document false loans which were used to conceal losses arising from unauthorised trading.
Customers whose funds were used were told they were providing loans to other UBS customers with promises of high rates of interest. To make these ‘loans’ appear official, documents were produced using UBS headed paper and sent to customers stating that the ‘loans’ were guaranteed by the firm.
The FSA’s investigation concluded that Cumming signed these documents on seven occasions between October 2005 and October 2007 having been asked by a senior colleague to do so, even though he knew the ‘loans’ were not authorised by UBS.
By late 2007, Cumming was fully aware that the ‘loans’ were being used to conceal losses which had arisen as a result of unauthorised transactions but he failed to escalate this knowledge. Instead, Cumming signed a further ‘loan’ and allowed the ruse to continue.
Margaret Cole, FSA director of enforcement and financial crime, said:
“Cumming deliberately misled UBS and its customers. Although he did not stand to make a personal gain, his complicity allowed a colleague to continue making unauthorised trades, while the losses continued to mount up.
“We are committed to deterring behaviour of this kind by banning and fining anyone found to have committed such misconduct.”
In setting the financial penalty, the FSA took into account the fact that Cumming did not initiate the circumstances which led to his misconduct, nor did he conduct any of the unauthorised transactions. Because he agreed to settle at an early stage of the FSA’s investigation he qualified for a 30% discount in respect of his financial penalty. Cumming also proved to the FSA that he is in serious financial hardship, entitling him to a further discount.
If it wasn’t for the settlement discount and Cumming’s hardship, the FSA would have imposed a financial penalty of £100,000.
Cumming worked at UBS’ London branch from 1999 until March 2008, when he was dismissed for gross misconduct relating to this case.
Earlier this month, the FSA fined UBS £8 million for systems and controls failures that allowed employees to carry out unauthorised transactions with customer money. UBS has since repaid the affected customers in excess of US$42 million by way of redress. "
The issue for compliance and HR departments is to decide whether they should be re-checking current employees, what they should be re-checking and how often. Our view is that annual credit checks, especially for approved persons would help alert the employer if the employee was facing financial pro(a threat to their fitness and propriety for a role). Annual criminal checks should be done more selectively, since a court case would not easily go undetected by the employer.
Obviously, no decision should be taken without input from the risk management department, but as a minimum, firms should be asking employees to fill out and sign an annual declaration stating that they have not gotten any criminal convictions or judgments since their last declaration.
This is a case of a trusted, current employee who betrayed their employer and caused them untold grief, loss of reputation and financial penalties. Andrew Cumming, a former client adviser at the London branch of UBS AG (UBS), was fined and banned by the FSA for his role in the activities that led to the firm receiving an £8 million fine earlier this month for systems and controls failings.
According to the FSA's press release "Cumming has been fined £35,000 and prohibited from performing any regulated function for a minimum period of five years on the grounds that he is not fit and proper.
Paperwork signed by Cumming, who worked in UBS’ international wealth management business, helped to document false loans which were used to conceal losses arising from unauthorised trading.
Customers whose funds were used were told they were providing loans to other UBS customers with promises of high rates of interest. To make these ‘loans’ appear official, documents were produced using UBS headed paper and sent to customers stating that the ‘loans’ were guaranteed by the firm.
The FSA’s investigation concluded that Cumming signed these documents on seven occasions between October 2005 and October 2007 having been asked by a senior colleague to do so, even though he knew the ‘loans’ were not authorised by UBS.
By late 2007, Cumming was fully aware that the ‘loans’ were being used to conceal losses which had arisen as a result of unauthorised transactions but he failed to escalate this knowledge. Instead, Cumming signed a further ‘loan’ and allowed the ruse to continue.
Margaret Cole, FSA director of enforcement and financial crime, said:
“Cumming deliberately misled UBS and its customers. Although he did not stand to make a personal gain, his complicity allowed a colleague to continue making unauthorised trades, while the losses continued to mount up.
“We are committed to deterring behaviour of this kind by banning and fining anyone found to have committed such misconduct.”
In setting the financial penalty, the FSA took into account the fact that Cumming did not initiate the circumstances which led to his misconduct, nor did he conduct any of the unauthorised transactions. Because he agreed to settle at an early stage of the FSA’s investigation he qualified for a 30% discount in respect of his financial penalty. Cumming also proved to the FSA that he is in serious financial hardship, entitling him to a further discount.
If it wasn’t for the settlement discount and Cumming’s hardship, the FSA would have imposed a financial penalty of £100,000.
Cumming worked at UBS’ London branch from 1999 until March 2008, when he was dismissed for gross misconduct relating to this case.
Earlier this month, the FSA fined UBS £8 million for systems and controls failures that allowed employees to carry out unauthorised transactions with customer money. UBS has since repaid the affected customers in excess of US$42 million by way of redress. "
The issue for compliance and HR departments is to decide whether they should be re-checking current employees, what they should be re-checking and how often. Our view is that annual credit checks, especially for approved persons would help alert the employer if the employee was facing financial pro(a threat to their fitness and propriety for a role). Annual criminal checks should be done more selectively, since a court case would not easily go undetected by the employer.
Obviously, no decision should be taken without input from the risk management department, but as a minimum, firms should be asking employees to fill out and sign an annual declaration stating that they have not gotten any criminal convictions or judgments since their last declaration.
Tuesday 10 November 2009
Right to Work - What to check and how?
Right to Work is an area that always puzzles HR departments. There are so many permutations and the rules keep changing. Below is a helpful article published in the Recruiter Magazine on November 4th, 2009. Read on..
____________________________________________________________
Companies that supply staff should be wary of the reputation risk to their clients of using staff with no right to work in the UK.
Kenneth Hanslip, head of professional standards at NSL Services, a company that provides traffic wardens (civil enforcement officers) to many local authorities, said that whenever a traffic warden was discovered to be working in the UK illegally there were stories in the press about “terrorist or Taliban traffic wardens”. This would lead to calls from concerned clients.
Other risks of employing illegal workers are a civil penalty of £10,000 per person employed as well as the risk of those individuals carrying out fraud and other criminal activity within the company, said Hanslip.
In one case, he said NSL (formerly part of National Car Parks) lost £43,000 when an accounts clerk committed fraud. “We still do not know who that accounts clerk was, because the person disappeared,” Hanslip told HR and recruitment professionals at a Symposium Events forum on Employing and Vetting Non-UK Nationals in London.
Hanslip said that around 30% of the company’s staff are foreign nationals from outside the European Economic Area (EEA), with many coming from West Africa, but also Afghanistan and Iraq.
Hanslip recommended a number of actions that recruiters could take to reduce the risk of taking on staff without a legal right to work in the UK:
- close liaison with local UK Border Agency immigration teams
- regular National Insurance number payroll sweeps to identify discrepancies
- avoid temporary National Insurance numbers
- if in doubt about the authenticity of a document, seek assistance from document validation services at the UK Border Agency
- don’t take documents at face value - always speak to the person face-to-face
- don’t rely on photocopies of documents provided by the applicant, but check the original and then photocopy it yourself
- don’t assume that those with no right to work in the UK won’t target your company, or industry. People often pick out unsuspecting employers and industries to build up a work history that they can then use to get work elsewhere
____________________________________________________________
Companies that supply staff should be wary of the reputation risk to their clients of using staff with no right to work in the UK.
Kenneth Hanslip, head of professional standards at NSL Services, a company that provides traffic wardens (civil enforcement officers) to many local authorities, said that whenever a traffic warden was discovered to be working in the UK illegally there were stories in the press about “terrorist or Taliban traffic wardens”. This would lead to calls from concerned clients.
Other risks of employing illegal workers are a civil penalty of £10,000 per person employed as well as the risk of those individuals carrying out fraud and other criminal activity within the company, said Hanslip.
In one case, he said NSL (formerly part of National Car Parks) lost £43,000 when an accounts clerk committed fraud. “We still do not know who that accounts clerk was, because the person disappeared,” Hanslip told HR and recruitment professionals at a Symposium Events forum on Employing and Vetting Non-UK Nationals in London.
Hanslip said that around 30% of the company’s staff are foreign nationals from outside the European Economic Area (EEA), with many coming from West Africa, but also Afghanistan and Iraq.
Hanslip recommended a number of actions that recruiters could take to reduce the risk of taking on staff without a legal right to work in the UK:
- close liaison with local UK Border Agency immigration teams
- regular National Insurance number payroll sweeps to identify discrepancies
- avoid temporary National Insurance numbers
- if in doubt about the authenticity of a document, seek assistance from document validation services at the UK Border Agency
- don’t take documents at face value - always speak to the person face-to-face
- don’t rely on photocopies of documents provided by the applicant, but check the original and then photocopy it yourself
- don’t assume that those with no right to work in the UK won’t target your company, or industry. People often pick out unsuspecting employers and industries to build up a work history that they can then use to get work elsewhere
Powerchex Wins Innovation Award Second Year in a Row
We are absolutely delighted to have been recognised again in the innovation category of the Thames Gateway Business Awards. Below is the press release
________________________________________________________
In the midst of the recession, Powerchex innovates and wins award at the Thames Gateway Business Awards
Powerchex, the leading pre-employment screening firm for financial services, has again won recognition at the prestigious Thames Gateway Business Awards.
This year, Powerchex was praised in the Innovation Category for its new service ‘Know Your Supplier’ (KYS). Judges were looking for businesses that could demonstrate that they had successfully introduced a new idea, technique or practice that had improved their business, how the idea was implemented and how it had impacted upon the business.
The glittering awards ceremony took place at the Troxy on Friday evening with more than 700 people in attendance. Judges paid tribute to Powerchex, recognising the bravery and forward-thinking of an SME prepared to innovate in a recession.
“I am absolutely ecstatic that our achievement has been recognised on such a scale,” stated Alexandra Kelly, Managing Director of Powerchex. “Not only have we shown that we are prepared to innovate and look at something completely new, but also have the confidence to put resources behind the project at such a difficult time for many small businesses.”
This is the second year running that Powerchex has been successful in the Innovation Category of the Thames Gateway Awards. Last year, Powerchex won praise for its pioneering staff training and development programme, which lowered costs by reducing staff turnover and increasing the output per person.
“It is extremely important to invest in your workforce, even in times of economic difficulty,” continues Kelly. “While it can be easy to concentrate only on the front-line of your business, keeping staff motivated and your cost-per-unit as low as possible maximises your chances of not just surviving, but actually growing your market share as markets recover.”
Enzo Testa, Executive Managing Director of Archant London commented; “We are proud to do all we can to support, encourage and promote businesses within the many local areas we cover. The rich mix of successful businesses across The Thames Gateway region make our communities, places we can be proud of. To this end, we are pleased to have organised this event.”
________________________________________________________
In the midst of the recession, Powerchex innovates and wins award at the Thames Gateway Business Awards
Powerchex, the leading pre-employment screening firm for financial services, has again won recognition at the prestigious Thames Gateway Business Awards.
This year, Powerchex was praised in the Innovation Category for its new service ‘Know Your Supplier’ (KYS). Judges were looking for businesses that could demonstrate that they had successfully introduced a new idea, technique or practice that had improved their business, how the idea was implemented and how it had impacted upon the business.
The glittering awards ceremony took place at the Troxy on Friday evening with more than 700 people in attendance. Judges paid tribute to Powerchex, recognising the bravery and forward-thinking of an SME prepared to innovate in a recession.
“I am absolutely ecstatic that our achievement has been recognised on such a scale,” stated Alexandra Kelly, Managing Director of Powerchex. “Not only have we shown that we are prepared to innovate and look at something completely new, but also have the confidence to put resources behind the project at such a difficult time for many small businesses.”
This is the second year running that Powerchex has been successful in the Innovation Category of the Thames Gateway Awards. Last year, Powerchex won praise for its pioneering staff training and development programme, which lowered costs by reducing staff turnover and increasing the output per person.
“It is extremely important to invest in your workforce, even in times of economic difficulty,” continues Kelly. “While it can be easy to concentrate only on the front-line of your business, keeping staff motivated and your cost-per-unit as low as possible maximises your chances of not just surviving, but actually growing your market share as markets recover.”
Enzo Testa, Executive Managing Director of Archant London commented; “We are proud to do all we can to support, encourage and promote businesses within the many local areas we cover. The rich mix of successful businesses across The Thames Gateway region make our communities, places we can be proud of. To this end, we are pleased to have organised this event.”
Wednesday 14 October 2009
FSA outlines its approval and interview process for significant influence functions
The press release from the FSA below, even though widely expected, will have far reaching effects in how the regulator will view a firm’s assessment of a senior candidate’s competencies. I have no doubt the FSA will be seeking for examples of non-compliance, so it is probably a good idea to go over the files of senior individuals and make sure that all the required information is in place. As part of this requirement, I would also recommend that you keep on file any notes made during interview that support your assessment of the person’s competency.
________________________________________________
The Financial Services Authority (FSA) has written to the CEOs of 5,000 regulated firms to reinforce how its intensive regulatory approach applies to approving and supervising senior personnel performing significant influence functions (SIFs).
The letter reminds CEOs that the responsibility to assess whether a candidate is fit and proper to carry out a role rests with the firm and that firms should, therefore, have robust recruitment, referencing and due diligence processes in place.
As part of the SIF approval regime, the FSA has said it will undertake close vetting of appointments and will expect to interview candidates applying for SIF roles. Therefore, firms are being encouraged to engage with the FSA early in the recruitment process and for major firms, this should be at the point of drawing up a shortlist rather than waiting until the preferred candidate stage.
Firms are also urged to provide sufficient information with their applications (including supporting documents – for example head-hunter reports) and the rationale they have used to conclude that the candidate is fit to proper to perform the role. Applications must be made in a timely manner and any failure to engage promptly with the FSA may impede a firm’s plans to publicly announce a new appointment.
The enhanced SIF regime is one of the FSA’s responses to the financial crisis, which exposed governance and risk management shortcomings across numerous firms in roles such as chair, CEO, and finance or risk director. In the 12 months since October 2008 the FSA has conducted 172 SIF interviews, resulting in 18 candidates withdrawing their applications which shows there is considerable scope for some firms to be more robust in their own recruitment processes.
Graeme Ashley-Fenn, FSA director of permissions, decisions and reporting, said:
“It is crucial, that at a time when effective governance has never been more important, candidates have the right levels of competence and capability to perform these senior roles and that they are fully aware of their responsibilities.
“The onus is on firms to ensure candidates applying for influential positions are fit and proper to perform the role. Our individually tailored approval interviews will help us assess whether the individual has the right experience and understanding but also whether they will enhance the overall management strength and insight of the firm.”
NOTES FOR EDITORS
The FSA now interviews all candidates for SIF positions and in August 2009, extended the scope to include people employed by an unregulated parent undertaking or holding company, whose decisions or actions are regularly taken into account by the governing body of a regulated firm and to all proprietary traders who are not senior managers but who are likely to exert significant influence on a firm. These changes came into effect on 6 August 2009, with a transitional period of six months.
________________________________________________
The Financial Services Authority (FSA) has written to the CEOs of 5,000 regulated firms to reinforce how its intensive regulatory approach applies to approving and supervising senior personnel performing significant influence functions (SIFs).
The letter reminds CEOs that the responsibility to assess whether a candidate is fit and proper to carry out a role rests with the firm and that firms should, therefore, have robust recruitment, referencing and due diligence processes in place.
As part of the SIF approval regime, the FSA has said it will undertake close vetting of appointments and will expect to interview candidates applying for SIF roles. Therefore, firms are being encouraged to engage with the FSA early in the recruitment process and for major firms, this should be at the point of drawing up a shortlist rather than waiting until the preferred candidate stage.
Firms are also urged to provide sufficient information with their applications (including supporting documents – for example head-hunter reports) and the rationale they have used to conclude that the candidate is fit to proper to perform the role. Applications must be made in a timely manner and any failure to engage promptly with the FSA may impede a firm’s plans to publicly announce a new appointment.
The enhanced SIF regime is one of the FSA’s responses to the financial crisis, which exposed governance and risk management shortcomings across numerous firms in roles such as chair, CEO, and finance or risk director. In the 12 months since October 2008 the FSA has conducted 172 SIF interviews, resulting in 18 candidates withdrawing their applications which shows there is considerable scope for some firms to be more robust in their own recruitment processes.
Graeme Ashley-Fenn, FSA director of permissions, decisions and reporting, said:
“It is crucial, that at a time when effective governance has never been more important, candidates have the right levels of competence and capability to perform these senior roles and that they are fully aware of their responsibilities.
“The onus is on firms to ensure candidates applying for influential positions are fit and proper to perform the role. Our individually tailored approval interviews will help us assess whether the individual has the right experience and understanding but also whether they will enhance the overall management strength and insight of the firm.”
NOTES FOR EDITORS
The FSA now interviews all candidates for SIF positions and in August 2009, extended the scope to include people employed by an unregulated parent undertaking or holding company, whose decisions or actions are regularly taken into account by the governing body of a regulated firm and to all proprietary traders who are not senior managers but who are likely to exert significant influence on a firm. These changes came into effect on 6 August 2009, with a transitional period of six months.
Wednesday 7 October 2009
Powerchex warn that temps require the same level of pre-employment screening as permanent employees
I am sure that everyone has been appauled by the lapses in control that led to innocent children being abused by the people they should trust most, their childminders. This should serve as a reminder that a proper pre-employment screening policy should not exclude casual workers.
____________________________________________________________
A convicted child sex offender was able to obtain employment in a nursery after staff failed to carry out the required pre-employment screening checks.
Andrew Smith was employed in the kitchen of Norwood Manor Day Nursery through employment agency Reed despite his name appearing on the sex offender’s register after he was caught sending a string of perverted internet messages and webcam footage of him performing a solo sex act to someone he thought was a 13-year-old girl, but was in fact an undercover police officer.
Smith subsequently served 6 months of a 12 month jail sentence and was placed on the sex offenders register for 10 years. The Criminal Records check that is required for those working in nurseries would have revealed this but staff failed to comply.
Alexandra Kelly, a Director at Powerchex, one of the leading pre-employment screening providers, believes that Smith being a temporary employee is no excuse for a low level of vetting, “We advise our clients to determine the level of vetting required using a risk based approach. Temporary workers pose the same, if not a bigger risk to the company than permanent employees. With temps there is an emphasis on the speed of vetting but companies should work closely with their provider of pre-employment screening to ensure that this need does not prevent proper due diligence taking place.”
____________________________________________________________
A convicted child sex offender was able to obtain employment in a nursery after staff failed to carry out the required pre-employment screening checks.
Andrew Smith was employed in the kitchen of Norwood Manor Day Nursery through employment agency Reed despite his name appearing on the sex offender’s register after he was caught sending a string of perverted internet messages and webcam footage of him performing a solo sex act to someone he thought was a 13-year-old girl, but was in fact an undercover police officer.
Smith subsequently served 6 months of a 12 month jail sentence and was placed on the sex offenders register for 10 years. The Criminal Records check that is required for those working in nurseries would have revealed this but staff failed to comply.
Alexandra Kelly, a Director at Powerchex, one of the leading pre-employment screening providers, believes that Smith being a temporary employee is no excuse for a low level of vetting, “We advise our clients to determine the level of vetting required using a risk based approach. Temporary workers pose the same, if not a bigger risk to the company than permanent employees. With temps there is an emphasis on the speed of vetting but companies should work closely with their provider of pre-employment screening to ensure that this need does not prevent proper due diligence taking place.”
Thursday 1 October 2009
The Truth Behind Foreign Identity Documents
How many of you find it really difficult to decide whether the documents you are looking at are legitimate. The truth is that most HR professionals have trouble with the numerous documents that they are presented by today's international workforce. Powerchex works with Keesing Reference systems who have developed a brilliant database of travel documents from around the world. If you would like to know more about how to benefit, give us a call at Powerchex. In the meantime, here is an article, by Daniel Suess, the sales manager at Keesing, explaining how to spot questionable documents.
_____________________________________________________
Challenged when checking foreign passports and ID cards?
Here’s why ...
The number of ID documents currently in circulation is staggering. Every year, 208 countries issue countless documents, ranging from passports, ID cards and driving licences to visas and work permits. What’s more, 150 new document types join the existing pool on an annual basis.
Given the complexity and sheer volume of documents in issue, the authentication of ID documents presents HR departments with a considerable challenge. Indeed, many HR professionals feel that a document’s authenticity can only be established by professional inspectors using bespoke equipment.
And yet the employer is officially legally responsible for inspecting these documents…!
How do you check a Chinese passport?
In practice, day-to-day responsibility for the authentication of ID documents if often assigned to the HR department. As a consequence, HR staff may well be presented with an ID document they’ve never seen before. How, for example, would you authenticate a passport presented by a Chinese applicant? The Chinese passport has its own unique (security) features, including a watermark, an electronic data chip, and a UV feature, for example. The authenticity of a document can often be established on the basis of these features.
So which features should you look for? How, for that matter, would you establish if the individual in question requires a work permit? More often than not, it’s up to the HR department to answer these questions.
An ID document contains unique data. Think, for example, of the personal particulars (the holder’s name, date of birth, tax and social insurance number, etc) and the Machine Readable Zone or MRZ - a magnetic strip, usually located near the foot of the document, containing an alphanumeric code. This unique code is creating by applying an algorithm to the document data. Research has shown that more than 80% of all forgeries and counterfeits are uncovered because the MRZ code is incorrect.
Most people are familiar with only a small number of ID documents. While most employers will recognise a UK passport, few will be familiar with a Polish or Senegalese ID document. Another thing to bear in mind is that recognising a passport is not quite the same as spotting a counterfeit.
Help from the authorities?
To compensate for their inexperience and limited know-how, HR departments are encouraged to draw on the expertise of public-sector organisations such as the Home Office. Unfortunately such assistance doesn’t necessarily allow them to establish the authenticity of all ID documents they encounter. This is because public-sector organisations tend to focus on the inspection and verification of domestic ID documents. As a consequence, their experience is not always relevant to employers that recruit foreign staff.
Legal obligation to inspect and verify ID documents
To tackle identity fraud and illegal working, parliament passed the Law for Employers on Preventing Illegal Working in 2008. Under this law, employees are responsible for preventing illegal working, while the authorities are responsible for monitoring compliance. Employers who knowingly or otherwise recruit illegal workers risk a fine or even a prison term. This makes it all the more important that employers are in a position to inspect ID documents presented by (potential) employees.
The best and probably the only way to avoid illegal working is therefore to establish the identity of a potential employee before he or she is recruited. Ideally, the inspection and verification of ID documents forms part of the employee screening process, allowing the employer to meet its legal obligation to verify an applicant’s identity before offering him or her a contract.
Any employer that fails to comply could face a hefty fine. Indirect damage, including a loss of reputation, can also be substantial. Faced with these prospects, companies are understandably keen to avoid employing illegal workers. While many companies are eager to comply with current legislation, thereby avoiding illegal employment and related fines, few have found an appropriate solution yet.
The extent to which fraud involving counterfeit and stolen ID documents affects the corporate sector and society at large should not be underestimated. Identity fraud is part and parcel of everyday life - its scope increases each year, and the annual losses sustained by its victims run into billions of pounds. Identity fraud is increasingly common in the UK. According to the Association of Chief Police Officers (ACPO), fraud costs the UK taxpayer approximately £20 billion a year. Surprisingly, employees are among the worst culprits, putting employers in a particularly precarious position.
Last but not least: prevention better than cure
Embedding passport checks in the employee screening process allows you to establish the identity of an applicant, thus avoiding (fines for) employing illegal workers. Document checks can also act as a deterrent – a potential fraudster will think twice before applying to a company that verifies applicant identities as a matter of policy. Here too, prevention is better than cure. The development and implementation of internal recruitment procedures reduces recruitment-related risk and avoids illegal working. It also allows you to comply with prevailing legal requirements. The right combination of tools, software and reference materials should enable any organisation to conduct reliable checks.
10 practical tips when checking passports and ID cards
Only accept secure ID documents. In other words, documents that contain security features, such as passports and ID cards. Ask yourself whether a driving licence is acceptable. Generally speaking, these documents do not specify the holder’s nationality. Neither do they necessarily include a photograph. Documents that do not have security features, such as gas bills or bank statements, should never be accepted other than for address verification.
Always check the original ID document – do not accept copies. Make sure you copy or scan documents for your own records (remember to obtain the holder’s permission first).
Always follow the same inspection procedure and be mindful of details.
Always check more than one security feature.
Carefully compare the photograph in the document to the individual who presented it. Pay specific attention to the distance between the eyes, ears, lips and chin rather than the colour or length of his or her hair.
Ask the holder’s age and verify the answer based on the date of birth recorded in the document.
Check the document’s period of validity.
Check the document for damage, incisions and glue residue.
Check the order and number of visa pages. The page numbers must be sequential and should include the same document number.
Inspect the document under a UV lamp. Genuine documents remain dark when exposed to UV light; the watermark remains dark. Carefully compare the UV response or watermark to a reference image. Don’t forget: observing a UV response or watermark does not automatically mean the document is genuine!
Source: Keesing Reference Systems
_____________________________________________________
Challenged when checking foreign passports and ID cards?
Here’s why ...
The number of ID documents currently in circulation is staggering. Every year, 208 countries issue countless documents, ranging from passports, ID cards and driving licences to visas and work permits. What’s more, 150 new document types join the existing pool on an annual basis.
Given the complexity and sheer volume of documents in issue, the authentication of ID documents presents HR departments with a considerable challenge. Indeed, many HR professionals feel that a document’s authenticity can only be established by professional inspectors using bespoke equipment.
And yet the employer is officially legally responsible for inspecting these documents…!
How do you check a Chinese passport?
In practice, day-to-day responsibility for the authentication of ID documents if often assigned to the HR department. As a consequence, HR staff may well be presented with an ID document they’ve never seen before. How, for example, would you authenticate a passport presented by a Chinese applicant? The Chinese passport has its own unique (security) features, including a watermark, an electronic data chip, and a UV feature, for example. The authenticity of a document can often be established on the basis of these features.
So which features should you look for? How, for that matter, would you establish if the individual in question requires a work permit? More often than not, it’s up to the HR department to answer these questions.
An ID document contains unique data. Think, for example, of the personal particulars (the holder’s name, date of birth, tax and social insurance number, etc) and the Machine Readable Zone or MRZ - a magnetic strip, usually located near the foot of the document, containing an alphanumeric code. This unique code is creating by applying an algorithm to the document data. Research has shown that more than 80% of all forgeries and counterfeits are uncovered because the MRZ code is incorrect.
Most people are familiar with only a small number of ID documents. While most employers will recognise a UK passport, few will be familiar with a Polish or Senegalese ID document. Another thing to bear in mind is that recognising a passport is not quite the same as spotting a counterfeit.
Help from the authorities?
To compensate for their inexperience and limited know-how, HR departments are encouraged to draw on the expertise of public-sector organisations such as the Home Office. Unfortunately such assistance doesn’t necessarily allow them to establish the authenticity of all ID documents they encounter. This is because public-sector organisations tend to focus on the inspection and verification of domestic ID documents. As a consequence, their experience is not always relevant to employers that recruit foreign staff.
Legal obligation to inspect and verify ID documents
To tackle identity fraud and illegal working, parliament passed the Law for Employers on Preventing Illegal Working in 2008. Under this law, employees are responsible for preventing illegal working, while the authorities are responsible for monitoring compliance. Employers who knowingly or otherwise recruit illegal workers risk a fine or even a prison term. This makes it all the more important that employers are in a position to inspect ID documents presented by (potential) employees.
The best and probably the only way to avoid illegal working is therefore to establish the identity of a potential employee before he or she is recruited. Ideally, the inspection and verification of ID documents forms part of the employee screening process, allowing the employer to meet its legal obligation to verify an applicant’s identity before offering him or her a contract.
Any employer that fails to comply could face a hefty fine. Indirect damage, including a loss of reputation, can also be substantial. Faced with these prospects, companies are understandably keen to avoid employing illegal workers. While many companies are eager to comply with current legislation, thereby avoiding illegal employment and related fines, few have found an appropriate solution yet.
The extent to which fraud involving counterfeit and stolen ID documents affects the corporate sector and society at large should not be underestimated. Identity fraud is part and parcel of everyday life - its scope increases each year, and the annual losses sustained by its victims run into billions of pounds. Identity fraud is increasingly common in the UK. According to the Association of Chief Police Officers (ACPO), fraud costs the UK taxpayer approximately £20 billion a year. Surprisingly, employees are among the worst culprits, putting employers in a particularly precarious position.
Last but not least: prevention better than cure
Embedding passport checks in the employee screening process allows you to establish the identity of an applicant, thus avoiding (fines for) employing illegal workers. Document checks can also act as a deterrent – a potential fraudster will think twice before applying to a company that verifies applicant identities as a matter of policy. Here too, prevention is better than cure. The development and implementation of internal recruitment procedures reduces recruitment-related risk and avoids illegal working. It also allows you to comply with prevailing legal requirements. The right combination of tools, software and reference materials should enable any organisation to conduct reliable checks.
10 practical tips when checking passports and ID cards
Only accept secure ID documents. In other words, documents that contain security features, such as passports and ID cards. Ask yourself whether a driving licence is acceptable. Generally speaking, these documents do not specify the holder’s nationality. Neither do they necessarily include a photograph. Documents that do not have security features, such as gas bills or bank statements, should never be accepted other than for address verification.
Always check the original ID document – do not accept copies. Make sure you copy or scan documents for your own records (remember to obtain the holder’s permission first).
Always follow the same inspection procedure and be mindful of details.
Always check more than one security feature.
Carefully compare the photograph in the document to the individual who presented it. Pay specific attention to the distance between the eyes, ears, lips and chin rather than the colour or length of his or her hair.
Ask the holder’s age and verify the answer based on the date of birth recorded in the document.
Check the document’s period of validity.
Check the document for damage, incisions and glue residue.
Check the order and number of visa pages. The page numbers must be sequential and should include the same document number.
Inspect the document under a UV lamp. Genuine documents remain dark when exposed to UV light; the watermark remains dark. Carefully compare the UV response or watermark to a reference image. Don’t forget: observing a UV response or watermark does not automatically mean the document is genuine!
Source: Keesing Reference Systems
Friday 18 September 2009
Another Director Hit by FSA Fine as Powerchex Recommend
Failing to disclose employee lies result in firm being punished
London, August 26th, 2009. The FSA has fined the director of an IFA for failing to disclose
that an approved person had lied about the reason for leaving their previous job.
The FSA fined Christopher Davies, Director of Newquay Investment Services Limited,
£17,500 because of an adviser at Newquay who posed an “unacceptable risk of customers
being recommended unsuitable mortgages”.
It was only after Newquay had applied to the FSA for the adviser to be confirmed as an
approved person that Davies became aware that the adviser’s previous employer had
suspended the adviser because of concerns about his business methods and ethics. Davies
spoke to the adviser and concluded that the adviser had lied to him about why he had left
his previous employment, but did not alert the FSA.
The news of the fine comes not long after the FSA fined Richard Holmes, Director of AIF
Limited, for failing to monitor an appointed representative and carry out sufficient
pre‐employment screening checks.
Director of Pre‐employment specialists Powerchex, Alexandra Kelly, believes that the FSA
will continue to crack down on firms but believes those that are most vigilant before hiring
people are the least likely to find themselves in hot water with the FSA.
Kelly said, “Newquay Investment Services Limited could have avoided the situation by
implementing proper pre‐employment screening practices. If they had known about the
advisor’s past before he joined the company they never would have hired the individual in
the first place and most certainly would not have put them forward for approved status. Our
research has shown that the recession has caused people to hide less desirable aspects of
their past and lie more so effective pre‐employment screening is becoming more and more
important.”
London, August 26th, 2009. The FSA has fined the director of an IFA for failing to disclose
that an approved person had lied about the reason for leaving their previous job.
The FSA fined Christopher Davies, Director of Newquay Investment Services Limited,
£17,500 because of an adviser at Newquay who posed an “unacceptable risk of customers
being recommended unsuitable mortgages”.
It was only after Newquay had applied to the FSA for the adviser to be confirmed as an
approved person that Davies became aware that the adviser’s previous employer had
suspended the adviser because of concerns about his business methods and ethics. Davies
spoke to the adviser and concluded that the adviser had lied to him about why he had left
his previous employment, but did not alert the FSA.
The news of the fine comes not long after the FSA fined Richard Holmes, Director of AIF
Limited, for failing to monitor an appointed representative and carry out sufficient
pre‐employment screening checks.
Director of Pre‐employment specialists Powerchex, Alexandra Kelly, believes that the FSA
will continue to crack down on firms but believes those that are most vigilant before hiring
people are the least likely to find themselves in hot water with the FSA.
Kelly said, “Newquay Investment Services Limited could have avoided the situation by
implementing proper pre‐employment screening practices. If they had known about the
advisor’s past before he joined the company they never would have hired the individual in
the first place and most certainly would not have put them forward for approved status. Our
research has shown that the recession has caused people to hide less desirable aspects of
their past and lie more so effective pre‐employment screening is becoming more and more
important.”
Wednesday 19 August 2009
Judgement Call - Powerchex in the FT
Powerchex made another appearance in the FT's Judgement Call Column. For the full article, go to: http://www.ft.com/cms/s/0/622e675c-8c3f-11de-b14f-00144feabdc0.html
THE CV SCREENER
Alexandra Kelly
We were recently asked to screen a job applicant on behalf of one of our clients. He was interviewing for a senior position in a big City institution working with large amounts of capital and sensitive information. He was highly experienced and sailed through the interviews and was subsequently offered the job, at which point his file ended up with my team.
At first glance, his CV and background seemed fine – absolutely nothing there that would cause for suspicion from even an experienced recruitment professional. However, it emerged that this supposedly “ideal candidate”, was in fact an international fraudster convicted of embezzlement in a number of US states.
Needless to say, most embellishments by applicants are not quite so extreme, and more often concern the job applicant who conceals that they were fired from their previous role, or who lies about their job responsibilities or the number of people they managed. However, all these scenarios serve to demonstrate that you can never, ever truly know whether an applicant really is exactly who they say they are. Unless, of course, you check.
The writer is managing director of Powerchex, a pre-employment screening company
THE CV SCREENER
Alexandra Kelly
We were recently asked to screen a job applicant on behalf of one of our clients. He was interviewing for a senior position in a big City institution working with large amounts of capital and sensitive information. He was highly experienced and sailed through the interviews and was subsequently offered the job, at which point his file ended up with my team.
At first glance, his CV and background seemed fine – absolutely nothing there that would cause for suspicion from even an experienced recruitment professional. However, it emerged that this supposedly “ideal candidate”, was in fact an international fraudster convicted of embezzlement in a number of US states.
Needless to say, most embellishments by applicants are not quite so extreme, and more often concern the job applicant who conceals that they were fired from their previous role, or who lies about their job responsibilities or the number of people they managed. However, all these scenarios serve to demonstrate that you can never, ever truly know whether an applicant really is exactly who they say they are. Unless, of course, you check.
The writer is managing director of Powerchex, a pre-employment screening company
Tuesday 18 August 2009
HR, Facebook and Screening
This is an ongoing debate between HR departments, recruiters and screening firms. Should we check facebook profiles? Our standard response to all our clients is that we will check business profiles such as zoom and linkedin, but we will not check social networking profiles. Paul Reeves, who is a partner at the law firm of Stephenson Harwood wrote a very interesting posting in Managing people, Technology on Tue, 18/08/2009 - 13:38.
The article first appeared in HR Zone at: : http://www.hrzone.co.uk/topic/hr-snooping-facing-facebook
What do you think?
_______________________________________________________
In a recent and high profile example of some of the issues associated with social networking sites, the wife of the recently appointed chief of MI6, Sir John Sawers, disclosed details of their personal life and address on her Facebook page, compromising their personal and, potentially, national safety.
There have also been recent examples of footballers and cricketers using Twitter to air their views about their employers. The blurring of the lines between private and public space, which is part of the social networking phenomenon, is key to the problem. These very public spaces have the capacity to threaten existing jobs, future careers, personal safety and corporate reputations as well as providing opportunities to contravene copyright and other laws. Organisations and individuals all have a role to play in managing the impact of social networking.
Reputational damage
An innocent exchange of wall postings on Facebook could lead to an employee breaching their contractual obligations by, for example, disclosing confidential information about a company's business or its clients. This could clearly have an adverse effect so an employer should investigate any allegations of this nature with a view to taking disciplinary action.
An employee who makes derogatory comments about their work, or their colleagues, on their profile could face disciplinary action as well as possible defamation or libel actions, not to mention the potential damage to the company's public image. Employers should consider carefully the type of conduct that warrants disciplinary action and make this clear to employees.
The way an employee behaves in their personal life may not be how their employer would like them to behave but, provided it does not impact their work or the company's reputation, then any disciplinary action would be inappropriate and any dismissal as a result could lead to a claim for unfair dismissal. So not everything an employee posts on their social networking site should have an impact on their employment.
Bullying and harassment
The ability to join work groups on networking sites creates the opportunity for 'banter' between colleagues. In extreme cases, this could lead to a complaint of bullying or harassment for which an employer may be vicariously liable for the actions of its employees, so complaints must be treated seriously and dealt with promptly. Employers need to be alert to these issues and the potential risks they pose.
Managing employer access when recruiting
Some employers have viewed the rise in the use of social networking sites as an opportunity to vet job applicants for their suitability. This can be a risky tactic as it exposes employers to potential discrimination claims. If an applicant who has not been offered a job discovers that their profile has been accessed as part of the recruitment process they could allege that information about their age, race, sex or religion displayed on their profile played a part in the decision to reject them.
While the company may have rejected them for a completely unrelated and fair reason, the existence of this information, which would be discloseable in litigation, will provide an additional hurdle to overcome in defending any claim. If employers do use this as a recruitment tool, then it is advisable to have a paper-trail setting out why a candidate was unsuccessful.
Managing employee access
In light of the issues posed by social networking sites, many employers have considered preventing access to such sites or monitoring employees' use. Each of these options presents its own issues and, despite the potential risks, these sites can be useful for building business networks - LinkedIn and Plaxo are designed for professional business relationships. Restricted use could, therefore, be preferable to a total ban.
In addition, employees could see a total ban as an overreaction by employers to what is an increasingly common form of communication. Banning staff from using the sites could lower morale, especially in industries where long hours are common and access for reasonable periods is used as a break from work.
To manage this issue, employers should consider monitoring employee's use to ensure it is being used appropriately. Recently, an employee who was claiming to be sick updated his Facebook page with the fact that he was absent due to a hangover. The employer used this as evidence against him in a disciplinary process.
Employers should have an internet usage policy in place to monitor employees in order to comply with the Data Protection Act 1998. Public bodies must also factor in the Human Rights Act 1998, in particular article 8: the right to respect for private and family life.
Many internet policies were drafted before social networking sites became popular and may need to be updated to make sure the now cover these sites and the potential issues they throw up. Any changes should be communicated to all employees as this will strengthen an employer's position in the event of any disciplinary action or the need to defend any subsequent claim.
Unauthorised downloads
Employees often use social networking sites to share photographs or videos, including possibly unauthorised data while at work. This could not only damage the company's IT system, but is likely to be breach copyright.
Ownership of information
Where employees use social networking sites for business networking purposes via the employer's IT system, employers may be able to claim ownership of their profiles so that they can retain any information relating to business contacts. This can be useful for employers but they must make their employees aware of this position by including it in any internet policy.
Protecting organisations and individuals
To protect themselves under the current legislation, companies should:
Set out the parameters of internet usage (including downloads)
The consequences for breach of any internet policy , including reference to other related policies e.g. equal opportunities, harassment and bullying
Inform employees about the level of monitoring and the policy itself, including any changes
Follow fair procedures in respect of any disciplinary action and apply the policy consistently
Not be afraid to use information from social networking sites to deal with any misconduct, provided this is done appropriately.
For employees, the onus is on them to understand the policy and to ensure that their own site pages do not breach their employer's policies. They should also bear in mind that their pages are visible to millions of people globally and the consequences this may have.
The article first appeared in HR Zone at: : http://www.hrzone.co.uk/topic/hr-snooping-facing-facebook
What do you think?
_______________________________________________________
In a recent and high profile example of some of the issues associated with social networking sites, the wife of the recently appointed chief of MI6, Sir John Sawers, disclosed details of their personal life and address on her Facebook page, compromising their personal and, potentially, national safety.
There have also been recent examples of footballers and cricketers using Twitter to air their views about their employers. The blurring of the lines between private and public space, which is part of the social networking phenomenon, is key to the problem. These very public spaces have the capacity to threaten existing jobs, future careers, personal safety and corporate reputations as well as providing opportunities to contravene copyright and other laws. Organisations and individuals all have a role to play in managing the impact of social networking.
Reputational damage
An innocent exchange of wall postings on Facebook could lead to an employee breaching their contractual obligations by, for example, disclosing confidential information about a company's business or its clients. This could clearly have an adverse effect so an employer should investigate any allegations of this nature with a view to taking disciplinary action.
An employee who makes derogatory comments about their work, or their colleagues, on their profile could face disciplinary action as well as possible defamation or libel actions, not to mention the potential damage to the company's public image. Employers should consider carefully the type of conduct that warrants disciplinary action and make this clear to employees.
The way an employee behaves in their personal life may not be how their employer would like them to behave but, provided it does not impact their work or the company's reputation, then any disciplinary action would be inappropriate and any dismissal as a result could lead to a claim for unfair dismissal. So not everything an employee posts on their social networking site should have an impact on their employment.
Bullying and harassment
The ability to join work groups on networking sites creates the opportunity for 'banter' between colleagues. In extreme cases, this could lead to a complaint of bullying or harassment for which an employer may be vicariously liable for the actions of its employees, so complaints must be treated seriously and dealt with promptly. Employers need to be alert to these issues and the potential risks they pose.
Managing employer access when recruiting
Some employers have viewed the rise in the use of social networking sites as an opportunity to vet job applicants for their suitability. This can be a risky tactic as it exposes employers to potential discrimination claims. If an applicant who has not been offered a job discovers that their profile has been accessed as part of the recruitment process they could allege that information about their age, race, sex or religion displayed on their profile played a part in the decision to reject them.
While the company may have rejected them for a completely unrelated and fair reason, the existence of this information, which would be discloseable in litigation, will provide an additional hurdle to overcome in defending any claim. If employers do use this as a recruitment tool, then it is advisable to have a paper-trail setting out why a candidate was unsuccessful.
Managing employee access
In light of the issues posed by social networking sites, many employers have considered preventing access to such sites or monitoring employees' use. Each of these options presents its own issues and, despite the potential risks, these sites can be useful for building business networks - LinkedIn and Plaxo are designed for professional business relationships. Restricted use could, therefore, be preferable to a total ban.
In addition, employees could see a total ban as an overreaction by employers to what is an increasingly common form of communication. Banning staff from using the sites could lower morale, especially in industries where long hours are common and access for reasonable periods is used as a break from work.
To manage this issue, employers should consider monitoring employee's use to ensure it is being used appropriately. Recently, an employee who was claiming to be sick updated his Facebook page with the fact that he was absent due to a hangover. The employer used this as evidence against him in a disciplinary process.
Employers should have an internet usage policy in place to monitor employees in order to comply with the Data Protection Act 1998. Public bodies must also factor in the Human Rights Act 1998, in particular article 8: the right to respect for private and family life.
Many internet policies were drafted before social networking sites became popular and may need to be updated to make sure the now cover these sites and the potential issues they throw up. Any changes should be communicated to all employees as this will strengthen an employer's position in the event of any disciplinary action or the need to defend any subsequent claim.
Unauthorised downloads
Employees often use social networking sites to share photographs or videos, including possibly unauthorised data while at work. This could not only damage the company's IT system, but is likely to be breach copyright.
Ownership of information
Where employees use social networking sites for business networking purposes via the employer's IT system, employers may be able to claim ownership of their profiles so that they can retain any information relating to business contacts. This can be useful for employers but they must make their employees aware of this position by including it in any internet policy.
Protecting organisations and individuals
To protect themselves under the current legislation, companies should:
Set out the parameters of internet usage (including downloads)
The consequences for breach of any internet policy , including reference to other related policies e.g. equal opportunities, harassment and bullying
Inform employees about the level of monitoring and the policy itself, including any changes
Follow fair procedures in respect of any disciplinary action and apply the policy consistently
Not be afraid to use information from social networking sites to deal with any misconduct, provided this is done appropriately.
For employees, the onus is on them to understand the policy and to ensure that their own site pages do not breach their employer's policies. They should also bear in mind that their pages are visible to millions of people globally and the consequences this may have.
Friday 7 August 2009
Graduates are stretching the truth to get work in uncertain economic times
Powerchex has released their annual survey into CV discrepancies. Here is how it was reported in the Guardian:
_______________________________________________________
Under-21s told 29% more lies on job applications this year than last
Jessica Shepherd
guardian.co.uk, Thursday 6 August 2009 15.47 BST
More under-21-year-olds in the UK are lying on their CVs this year compared with last, a poll has found.
Of 4,735 job applications from all age groups sent to finance firms between June last year and this May, 899contained false information.Powerchex, a company which screens CVs and application forms on behalf of finance companies, found that of the 307 belonging to under-21s, 18% contained lies, an increase of 29% from last year, when only 14% of forms contained false information.
Under-21s are now the most likely to lie on job forms, the company says. Their most common lie was to claim a 2:1 university degree when they had been awarded a 2:2.
Others exaggerated menial jobs to make themselves sound more important. Another common lie was to claim they had left a job because their contract had expired rather than because they had been made to leave.
This year's final-year university students face the highest levels of graduate unemployment in a generation.
Alexandra Kelly, managing director of Powerchex, said: "The pressure of the recession on job markets seems to have led more applicants to believe that they should lie or make embellished claims to get jobs."
_______________________________________________________
Under-21s told 29% more lies on job applications this year than last
Jessica Shepherd
guardian.co.uk, Thursday 6 August 2009 15.47 BST
More under-21-year-olds in the UK are lying on their CVs this year compared with last, a poll has found.
Of 4,735 job applications from all age groups sent to finance firms between June last year and this May, 899contained false information.Powerchex, a company which screens CVs and application forms on behalf of finance companies, found that of the 307 belonging to under-21s, 18% contained lies, an increase of 29% from last year, when only 14% of forms contained false information.
Under-21s are now the most likely to lie on job forms, the company says. Their most common lie was to claim a 2:1 university degree when they had been awarded a 2:2.
Others exaggerated menial jobs to make themselves sound more important. Another common lie was to claim they had left a job because their contract had expired rather than because they had been made to leave.
This year's final-year university students face the highest levels of graduate unemployment in a generation.
Alexandra Kelly, managing director of Powerchex, said: "The pressure of the recession on job markets seems to have led more applicants to believe that they should lie or make embellished claims to get jobs."
Saturday 1 August 2009
Research finds that Linkedin profiles are more accurate than CVs
Candidates are often more honest in their LinkedIn profiles than in the CVs they send employers. At least that’s what LinkedIn founder Reid Hoffman said at the Social Recruiting Summit held recently at Google’s headquarters in Mountain View, CA. I suppose that this makes quite a bit of sense, if you consider that a LinkedIn profile can been seen by thousands of people who know the applicant and can expose any lies or exaggerations.
HR and screening staff should always look at discrepancies between CVs and online claims, but in addition they should also look at discrepancies between an applicant's CV and what they state on their screening/application form. We have found cases where the screening form was accurate and truthful, but did not bare any semblance with the CV on the basis of which the applicant was interviewed and made an offer.
Does your company do criminal checks on new employees?
According to government figures released today, criminals on probation committed more than 1000 serious crimes over the last two years, including nearly one murder a week in England and Wales.
1,167 offences were committed while the offender was being supervised by the probation officer. The total included 94 murders, 105 rapes and 43 arson attacks. This year's Ministry of Justice figures showed a further 657 criminals on probation were found guilty of serious violent or sexual crimes. More than 400 other criminals are accused of committing serious further offences, but their cases have not yet come to trial. The details were revealed in the 2008 offender management caseload which reveals details about the scale of prison and probation workload.
At the same time in a separate study in the United States Carnegie Mellon University researchers have created a model for providing empirical evidence on when an ex-convict has been “clean” long enough to be considered “redeemed” for employment purposes. The new study, which appears in the current issue of Criminology, estimates that after five years of staying clean an individual with a criminal record is of no greater risk of committing another crime than other individuals of the same age. The research comes at a time when President Barack Obama’s crime agenda includes breaking down employment barriers for people who have a prior criminal record, but who have stayed clean since their earlier offense.
What this makes abundantly clear to HR directors is that they need to be aware if a potential employee has a criminal record prior to making a decision to employ. A criminal record should not necessarily prevent employment but being aware is being forearmed.
Monday 27 July 2009
FSA confirms changes to the rules for approved persons
Folllowing through with its revamp of SIFs (Significant Influence Functions) approval process, the FSA has issued a policy statement confirming the changes. Recent events in financial markets, forced a re-think on the competency of SIFs and there is widespread belief that if certain senior people in banking had a better understanding of the banking world, the crisis may have been less severe. The FSA intents to inteview senior appointments to determine whether they have a good understanding of the risks specific to the business they will be managing.
See below, for the press release and policy statement:
______________________________________________________
The Financial Services Authority (FSA) has confirmed an extension of the approved persons regime for those that perform a ‘significant influence’ function at firms.
In its supervisory enhancement programme (SEP) the FSA stated that it would place greater emphasis on the role of senior management, including non-executive directors (NEDs). Today’s policy statement sets out changes to the approved persons regime which improves FSA’s approach to ‘significant influence’ functions by ensuring that those likely to exert a significant influence on a firm fall within the scope of the approved persons regime.
In particular, the FSA has:
· Extended the scope and application of CF1 (director function) and CF2 (Non- Executive Director) to include those persons employed by an unregulated parent undertaking or holding company, whose decisions or actions are regularly taken into account by the governing body of a regulated firm;
· Extended the definition of the significant management controlled function (CF29) to include all proprietary traders who are not senior managers but who are likely to exert significant influence on a firm; and,
· Amended the application of the approved persons regime to UK branches of overseas firms based outside the EEA.
Graeme Ashley-Fenn, director of permissions, decisions and reporting division, said:
“It is important that directors and senior managers at firms understand their regulatory obligations and have the relevant competencies and experience to carry out their roles with integrity.
“Since October 2008, the FSA has carried out 115 interviews for ‘significant influence’ posts at high impact firms. Nine applications have been withdrawn as a result. Once in post, where individuals fail to meet the required standards the FSA will consider enforcement action.”
These changes will come into effect on 6 August 2009 with a transitional period of six months. Firms should now begin assessing which individuals require approval and submit timely applications to comply with the end of the transitional period.
Full Policy Statement: http://www.fsa.gov.uk/pubs/policy/ps09_14.pdf
See below, for the press release and policy statement:
______________________________________________________
The Financial Services Authority (FSA) has confirmed an extension of the approved persons regime for those that perform a ‘significant influence’ function at firms.
In its supervisory enhancement programme (SEP) the FSA stated that it would place greater emphasis on the role of senior management, including non-executive directors (NEDs). Today’s policy statement sets out changes to the approved persons regime which improves FSA’s approach to ‘significant influence’ functions by ensuring that those likely to exert a significant influence on a firm fall within the scope of the approved persons regime.
In particular, the FSA has:
· Extended the scope and application of CF1 (director function) and CF2 (Non- Executive Director) to include those persons employed by an unregulated parent undertaking or holding company, whose decisions or actions are regularly taken into account by the governing body of a regulated firm;
· Extended the definition of the significant management controlled function (CF29) to include all proprietary traders who are not senior managers but who are likely to exert significant influence on a firm; and,
· Amended the application of the approved persons regime to UK branches of overseas firms based outside the EEA.
Graeme Ashley-Fenn, director of permissions, decisions and reporting division, said:
“It is important that directors and senior managers at firms understand their regulatory obligations and have the relevant competencies and experience to carry out their roles with integrity.
“Since October 2008, the FSA has carried out 115 interviews for ‘significant influence’ posts at high impact firms. Nine applications have been withdrawn as a result. Once in post, where individuals fail to meet the required standards the FSA will consider enforcement action.”
These changes will come into effect on 6 August 2009 with a transitional period of six months. Firms should now begin assessing which individuals require approval and submit timely applications to comply with the end of the transitional period.
Full Policy Statement: http://www.fsa.gov.uk/pubs/policy/ps09_14.pdf
Monday 20 July 2009
Powerchex's monthly employment offers survey makes it in the FT
Powerchex has a finger on the pulse of employment offers in financial services firms. With over 300 clients in the industry, we are the first ones to see a downturn or pickup in employment offers. Since September we have been publishing a monthly survey of job offers in financial services. Our findings have been picked up by several publications, most recently by the FT. Read on:Spoilt for choice on ex-banking employees
By Ruth Sullivan
Published: July 19 2009 08:53 Last updated: July 19 2009 08:53
Asset managers keen to recruit new talent have never had it so good as banks, reeling from the financial crisis, have cut employee numbers, putting a lot of teams out on the street.
Earlier this month, Morgan Stanley Investment Management’s global portfolio solutions team left en masse to set up a new Dutch global macro fund, linked to Worldview, while the real estate team at Citi Alternative Investments, headed by Daniel Pine, has decamped to Forum Partners, a real estate investment manager.
Henderson Global Investors has also been on the look-out for good people for its structured products team, recruiting from banking ranks in the past few months. The asset manager has picked up Ganesh Rajendra from Deutsche Bank to head its advisory team. It has also secured Dan Maynard from Morgan Stanley and hired a five-strong currency team from Fortis investment bank.
But in spite of a wealth of choice, it is important to make sure senior management, analysts or traders from an investment banking environment will fit in an asset management culture. Those who were involved in investment management at banks are more likely to suit asset managers than former traders.
Hermes, the UK asset manager owned by the BT Pension Scheme, has been hiring in the past 18 months, adding 55 people to its headcount with 95 new hires and 40 job losses. “Investment banks have been an obvious area that we have recruited from where investment management had become an integral part of their business strategy but that no longer applies in many cases,” says Rupert Clarke, chief executive.
But ex-prop desk traders that Hermes talked to were not such a good fit. “Very often they are incredibly smart individuals but in many cases they do not demonstrate the sense of responsibility that recognises this is somebody else’s money,” says Mike Webb, head of business development at Hermes.
Boutique asset managers have also been hiring from the large pool of ex-banking employees, taking on analysts and senior managers up to managing director level, says Andrew England, managing director at Morgan McKinley, a City recruitment consultant. “It is a huge coup for a boutique to take on a senior banker with specialist skills and good client relationships,” he says.
Rather than seek employment again, some former bank employees have set up their own fund management businesses, says Alexandra Kelly, a director at Powerchex, the pre-employment screening firm for financial services.
“More than 50 bankers have set up 13 hedge funds and asset managers in the past three months,” she says.
Asset managers are not the only ones taking advantage of the glut of talent on the market. Stockbrokers are also dipping into the pool, making up one of the biggest recruiters in recent months.
Job opportunities in brokerages rose by 77 per cent between April and June compared with the first three months of the year, says Powerchex.
Sarah Dudney, a partner at Lockwood Gibb & Associates, a financial services executive search group, attributes some of the brokerage hiring to “a new breed of small debt advisory and trading boutiques setting up in the past six months as investment banks struggle with deleveraging [and job cuts]”.
However, many bankers are fighting to get back into the big investment banks as the industry shrinks, she says. “If your career has been defined by high revenue in the world of investment banking, it is hard to change. Nobody wants to leave the party.”
Amin Rajan, chief executive of Create-Research, identifies several other directions unemployed bankers are taking in countries including the UK, US, Netherlands, France and Germany, where some of the biggest job cuts have been made.
These include financial engineering, debt restructuring, and mergers and acquisitions.
“Many have been developing good personal relationships with clients in their previous jobs, ready for starting up their own businesses,” he says.
However, he believes the biggest group of “banking refugees” are those “in denial [about their chances of getting back into the industry]. They are the complacent ones who have made a lot of money, are taking life easy and waiting for demand to pick up,” he says.
In the past two years, some bankers sought employment overseas in the Middle East, Singapore and Hong Kong but many have returned after those jobs, in turn, have been cut after a three or six-month period, says Ms Kelly.
Fewer job offers are on the horizon in investment banking than in many other areas of financial services. Eighty per cent fewer jobs were available in the second quarter this year compared to the same period a year earlier in the UK, Europe, and Asia, according to Powerchex.
And the outlook so far this year continues to be limited, with 50 per cent fewer job offers in the second quarter compared with the first three months.
Asset managers may be spoilt for choice for some time to come as ex-bankers, looking for longer-term, less precarious roles compete for a niche in the industry. The test will be whether they stay put when investment banks start hiring again.
Copyright The Financial Times Limited 2009
Monday 6 July 2009
Vetting tenants - What should you check before letting someone into your property?
In this weekend's FT there was an article about the increase in the level of checking tenants. This is fully undestandable in the current economic environment, but what kinds of checks are appropriate for a tenant?
"Letting agents are putting prospective tenants through rigorous credit checks as property owners want to see proof of income, including bonuses, as well as highly personal information such as the value of investment and share portfolios and savings accounts.
Knight Frank, the agent, said it had reviewed its reference process for new tenants to make sure it could provide enough data for landlords. Rather than using traditional credit checking agencies it is now conducting manual checks itself.
In some cases it is having to procure an indication of the tenants’ net wealth from their banks as well as guarantees from their employers that their jobs are permanent and not under threat, and details of their anticipated bonuses. " states the article in the FT.
Considering that the risk to the landlord is similar -if not greater- to the risk to an employer, then it would only make sense that checks that confirm the likelihood of the tenant remaining in employment should be conducted. Obviously an employer is unlikely to confirm whether they intend to make someone redundant in the near future, but asking the right questions may give you a good indication as to the relative job security of a prospective tenant.
"Letting agents are putting prospective tenants through rigorous credit checks as property owners want to see proof of income, including bonuses, as well as highly personal information such as the value of investment and share portfolios and savings accounts.
Knight Frank, the agent, said it had reviewed its reference process for new tenants to make sure it could provide enough data for landlords. Rather than using traditional credit checking agencies it is now conducting manual checks itself.
In some cases it is having to procure an indication of the tenants’ net wealth from their banks as well as guarantees from their employers that their jobs are permanent and not under threat, and details of their anticipated bonuses. " states the article in the FT.
Considering that the risk to the landlord is similar -if not greater- to the risk to an employer, then it would only make sense that checks that confirm the likelihood of the tenant remaining in employment should be conducted. Obviously an employer is unlikely to confirm whether they intend to make someone redundant in the near future, but asking the right questions may give you a good indication as to the relative job security of a prospective tenant.
Thursday 2 July 2009
FSA fines director for appointed representative control failings
HOT OFF THE PRESS - FSA PRESS RELEASE
The Financial Services Authority (FSA) has fined Richard Holmes, a director of insurance broker AIF Limited, £20,020 for control failings in relation to an appointed representative firm (AR).
In September 2006, Holmes appointed an AR without carrying out the necessary checks, using only assurances from two business contacts. These individuals were subsequently banned by the FSA on 2 November 2006.
The following February, an insurance underwriter advised Holmes that the AR had premiums outstanding and rather than checking further, he relied on assurances from the AR that the premiums had been brought up to date. Again, when the AR appeared to have problems paying insurance premiums promptly to AIF, Holmes failed to increase his monitoring in any way and nor did he investigate the way the AR was carrying out its business.
Finally, following a complaint made by a client of the AR in September 2007, regarding its failure to put insurance in place, Holmes terminated the AR’s status.
Holmes subsequently became aware that the AR had received clients’ premiums but failed to pass them on to the underwriter, leaving the clients uninsured. In addition, the AR had also instructed AIF to arrange insurance policies on behalf of clients but had failed to pass on the client premiums to AIF.
The FSA is satisfied that Holmes then ensured that AIF took steps to arrange alternative insurance for the clients who had been left uninsured and also ensured that cover was maintained where AIF had already provided instructions to the insurer. The cost to AIF of ensuring clients remained on cover was approximately £27,000.
Jonathan Phelan, head of retail enforcement, said:
“Senior management at firms are responsible for the standards and conduct of the businesses they run – this applies to all firms both large and small. In particular, senior managers should ensure that their appointed representatives are appropriately overseen.
“As a director of the firm, Richard Holmes failed to carry out sufficient initial checks and then failed to monitor adequately the activities of the AR over a period of almost a year despite identifying a number of concerns early on during the AR agreement – this falls below the standards that FSA expects of firms. Directors who fail to discharge their personal responsibilities, including monitoring ARs properly, give rise to a risk of consumer loss and we will take action against them.”
The FSA took into account that Holmes did not deliberately set out to contravene its requirements; co-operated with the FSA and took remedial action to ensure clients were not left uninsured.
Holmes agreed to settle at an early stage of the FSA’s inquires and therefore qualified for a 30% discount under the FSA’s executive settlement procedures. Without the discount the fine would have been £28,600.
The Financial Services Authority (FSA) has fined Richard Holmes, a director of insurance broker AIF Limited, £20,020 for control failings in relation to an appointed representative firm (AR).
In September 2006, Holmes appointed an AR without carrying out the necessary checks, using only assurances from two business contacts. These individuals were subsequently banned by the FSA on 2 November 2006.
The following February, an insurance underwriter advised Holmes that the AR had premiums outstanding and rather than checking further, he relied on assurances from the AR that the premiums had been brought up to date. Again, when the AR appeared to have problems paying insurance premiums promptly to AIF, Holmes failed to increase his monitoring in any way and nor did he investigate the way the AR was carrying out its business.
Finally, following a complaint made by a client of the AR in September 2007, regarding its failure to put insurance in place, Holmes terminated the AR’s status.
Holmes subsequently became aware that the AR had received clients’ premiums but failed to pass them on to the underwriter, leaving the clients uninsured. In addition, the AR had also instructed AIF to arrange insurance policies on behalf of clients but had failed to pass on the client premiums to AIF.
The FSA is satisfied that Holmes then ensured that AIF took steps to arrange alternative insurance for the clients who had been left uninsured and also ensured that cover was maintained where AIF had already provided instructions to the insurer. The cost to AIF of ensuring clients remained on cover was approximately £27,000.
Jonathan Phelan, head of retail enforcement, said:
“Senior management at firms are responsible for the standards and conduct of the businesses they run – this applies to all firms both large and small. In particular, senior managers should ensure that their appointed representatives are appropriately overseen.
“As a director of the firm, Richard Holmes failed to carry out sufficient initial checks and then failed to monitor adequately the activities of the AR over a period of almost a year despite identifying a number of concerns early on during the AR agreement – this falls below the standards that FSA expects of firms. Directors who fail to discharge their personal responsibilities, including monitoring ARs properly, give rise to a risk of consumer loss and we will take action against them.”
The FSA took into account that Holmes did not deliberately set out to contravene its requirements; co-operated with the FSA and took remedial action to ensure clients were not left uninsured.
Holmes agreed to settle at an early stage of the FSA’s inquires and therefore qualified for a 30% discount under the FSA’s executive settlement procedures. Without the discount the fine would have been £28,600.
Monday 29 June 2009
Powerchex wins Business of the Year - Again!
Powerchex have scooped the Business of the Year award at the Docklands Business Club and East London Chamber of Commerce Business Awards. The awards and gala dinner were sponsored by Barclays and were held at the prestigious Formans Fish Island, overseeing the 2012 Olympics site. Powerchex’s success follows on from last year when they were awarded Business of the Year at the Thames Gateway Business Awards.
Powerchex were shortlisted for the much converted Business of the Year award alongside other businesses who had managed to sustain growth and profitability despite the tough economic conditions. The company have followed up on impressive financial results in 2007 and 2008 by continuing to be profitable in 2009 despite the recession. They have also acquired over 50 new clients since the turn of the year and boast an impressive office in London close to many of the financial institutions they service.
Powerchex specialise in employee screening and check the background, employment history, criminal records and professional qualifications of applicants on behalf of financial institutions and set the industry benchmark of 5 days for a background check. Alexandra Kelly, Managing Director of Powerchex, first took her idea to the Dragons Den on the BBC but was told that pre-employment screening could not be delivered in 5 days. Undeterred, Alexandra went it alone and started the business in 2005 with 1 employee, one desk and 2 computers.
Within months Alexandra convinced one of the largest insurers in the world to give Powerchex a chance and four years later they are just 1 of 310 financial institutions who entrust Powerchex with their employee screening.
Richard Keenan, Local Business Manager for Barclays, said, “Despite the economic downturn, Powerchex demonstrated their ability to grow the business substantially, concentrating on beating the competition hands down whilst developing their staff in a highly effective manner. Alexandra is the driving force behind the business and the team and Alexandra herself have built a solid foundation. I wish them all the best in the future.”
Powerchex reputation preceded them when they entered the Business of the Year category in this year's DBC/ELCC Business Awards sponsored by O2. Sweeping the opposition aside Alexandra Kelly stepped up to the podium to hear DBC Chairman Rita Beckwith tell her audience "Alexandra's vision, perseverance and entrepreneurial skills took Powerchex from a failed Dragon's Den competitor to become a highly respected, successful company. The motivation and management skills of her team deliver outstanding service and innovation to their clients."
Powerchex were shortlisted for the much converted Business of the Year award alongside other businesses who had managed to sustain growth and profitability despite the tough economic conditions. The company have followed up on impressive financial results in 2007 and 2008 by continuing to be profitable in 2009 despite the recession. They have also acquired over 50 new clients since the turn of the year and boast an impressive office in London close to many of the financial institutions they service.
Powerchex specialise in employee screening and check the background, employment history, criminal records and professional qualifications of applicants on behalf of financial institutions and set the industry benchmark of 5 days for a background check. Alexandra Kelly, Managing Director of Powerchex, first took her idea to the Dragons Den on the BBC but was told that pre-employment screening could not be delivered in 5 days. Undeterred, Alexandra went it alone and started the business in 2005 with 1 employee, one desk and 2 computers.
Within months Alexandra convinced one of the largest insurers in the world to give Powerchex a chance and four years later they are just 1 of 310 financial institutions who entrust Powerchex with their employee screening.
Richard Keenan, Local Business Manager for Barclays, said, “Despite the economic downturn, Powerchex demonstrated their ability to grow the business substantially, concentrating on beating the competition hands down whilst developing their staff in a highly effective manner. Alexandra is the driving force behind the business and the team and Alexandra herself have built a solid foundation. I wish them all the best in the future.”
Powerchex reputation preceded them when they entered the Business of the Year category in this year's DBC/ELCC Business Awards sponsored by O2. Sweeping the opposition aside Alexandra Kelly stepped up to the podium to hear DBC Chairman Rita Beckwith tell her audience "Alexandra's vision, perseverance and entrepreneurial skills took Powerchex from a failed Dragon's Den competitor to become a highly respected, successful company. The motivation and management skills of her team deliver outstanding service and innovation to their clients."
Tuesday 23 June 2009
Powerchex sign up to the Information Commissioner's Personal Information Promise
Powerchex have strengthened their commitment to data protection by signing up to the Information Commissioner’s Personal Information Promise.
The initiative was launched by the Information Commissioner in January 2009 in response to recent reports of major data losses by organisations and is designed to improve compliance with the Data Protection Act and help restore public trust and confidence in those who are entrusted with their personal information.
The Information Commissioner is urging the heads of organisations to sign up and commit to the principles outlined in the pledge to prove that they are dedicated to protecting data. So far senior leaders from organisations such as T-Mobile, British Gas, BT, the NHS Information Centre, Royal Mail and Vodafone, have all signed up.
Alexandra Kelly, Managing Director at Powerchex, said it was an easy decision to make. “Powerchex are already registered with the Information Commissioner as a data processor and data controller so this just backs up what we already do. Protecting the personal data of our clients and their applicants has always been one of our top priorities. Whether that means making sure that visitors are always escorted around the building or disabling USB ports on all of our computers, we have always been dedicated to complying, and more often than not, going beyond what the law requires.”
The initiative was launched by the Information Commissioner in January 2009 in response to recent reports of major data losses by organisations and is designed to improve compliance with the Data Protection Act and help restore public trust and confidence in those who are entrusted with their personal information.
The Information Commissioner is urging the heads of organisations to sign up and commit to the principles outlined in the pledge to prove that they are dedicated to protecting data. So far senior leaders from organisations such as T-Mobile, British Gas, BT, the NHS Information Centre, Royal Mail and Vodafone, have all signed up.
Alexandra Kelly, Managing Director at Powerchex, said it was an easy decision to make. “Powerchex are already registered with the Information Commissioner as a data processor and data controller so this just backs up what we already do. Protecting the personal data of our clients and their applicants has always been one of our top priorities. Whether that means making sure that visitors are always escorted around the building or disabling USB ports on all of our computers, we have always been dedicated to complying, and more often than not, going beyond what the law requires.”
Monday 22 June 2009
What are the most common CV lies?
According to Les Rosen, author of the Safe Hiring Manual and founder of the NAPBS (National Association of Professional Background Screeners), the six most common fabrications from job applicants are:
Claiming a degree not earned: Yes, believe it or not, applicants will make up a degree. Sometimes, they actually went to the school but never graduated. Some applicants may have had just a few credits to go, and decided to award themselves the degree anyway. On some occasions, an applicant will claim a degree from a school they did not even attend. The best practice for an employer is to state clearly on the application form that the applicant should list any school they want the employer to consider. In that way, if an applicant lies, the employer can act on the lack of truthfulness regardless of whether the educational requirement is part of the job requirements.
Diploma Mills or Fake Degree: A related issue is diploma mills or fake degrees that can be purchased online. For those that actually attended classes, read books, wrote papers and took tests to earn a diploma, you apparently did it the old fashioned way. Now, getting a “degree” is as easy as going online and using your credit card. There are even websites that will print out very convincing, fake degrees from nearly any school in America. In fact, the author obtained a degree for his dog in Business Administration from the University of Arizona-and the dog had been dead for ten years. A transcript was even obtained and the dog got a “B” in English! Some sites will even provide a phone number so an employer can call and verify the fake degree. Some of the degree mills even have fake accreditation agencies with names similar to real accreditation bodies, in order to give a fake accreditation for a fake school.
Job Title: Another area of faking is the job description or job title. Applicants can easily give their career an artificial boost by “promoting” themselves to a supervisor position, even if they never managed anyone.
Dates of Employment: Another concern for employers is applicants that cover up dates of employment in order to hide “employment gaps.” For some applicants, it may be a seemingly innocent attempt to hide the fact that it has taken awhile to get a new job. In other cases, the date fabrication can be more sinister, such as a person that spent time in custody for a crime who may be trying to hide that fact.
Compensation: A related issue is pay – applicants have been known to exaggerate compensation in order to have a better negotiating position in the new job.
Lack of Criminal Record: Nearly every application will have a question about past criminal conduct. Although employers may not “automatically” eliminate a job applicant without a showing of a “business necessity,” if the person lies, then the employer would have grounds to deny employment based upon dishonesty.
The common denominator in all of these: they can be all be discovered by a program of pre-employment screening. To quote a phrase popular in the 1980s. “Trust, but verify.”
Claiming a degree not earned: Yes, believe it or not, applicants will make up a degree. Sometimes, they actually went to the school but never graduated. Some applicants may have had just a few credits to go, and decided to award themselves the degree anyway. On some occasions, an applicant will claim a degree from a school they did not even attend. The best practice for an employer is to state clearly on the application form that the applicant should list any school they want the employer to consider. In that way, if an applicant lies, the employer can act on the lack of truthfulness regardless of whether the educational requirement is part of the job requirements.
Diploma Mills or Fake Degree: A related issue is diploma mills or fake degrees that can be purchased online. For those that actually attended classes, read books, wrote papers and took tests to earn a diploma, you apparently did it the old fashioned way. Now, getting a “degree” is as easy as going online and using your credit card. There are even websites that will print out very convincing, fake degrees from nearly any school in America. In fact, the author obtained a degree for his dog in Business Administration from the University of Arizona-and the dog had been dead for ten years. A transcript was even obtained and the dog got a “B” in English! Some sites will even provide a phone number so an employer can call and verify the fake degree. Some of the degree mills even have fake accreditation agencies with names similar to real accreditation bodies, in order to give a fake accreditation for a fake school.
Job Title: Another area of faking is the job description or job title. Applicants can easily give their career an artificial boost by “promoting” themselves to a supervisor position, even if they never managed anyone.
Dates of Employment: Another concern for employers is applicants that cover up dates of employment in order to hide “employment gaps.” For some applicants, it may be a seemingly innocent attempt to hide the fact that it has taken awhile to get a new job. In other cases, the date fabrication can be more sinister, such as a person that spent time in custody for a crime who may be trying to hide that fact.
Compensation: A related issue is pay – applicants have been known to exaggerate compensation in order to have a better negotiating position in the new job.
Lack of Criminal Record: Nearly every application will have a question about past criminal conduct. Although employers may not “automatically” eliminate a job applicant without a showing of a “business necessity,” if the person lies, then the employer would have grounds to deny employment based upon dishonesty.
The common denominator in all of these: they can be all be discovered by a program of pre-employment screening. To quote a phrase popular in the 1980s. “Trust, but verify.”
Friday 19 June 2009
Powerchex issues statement on Data Security in Financial Services
Powerchex warns financial institutions on poor data security
London, June 19th, 2009. Powerchex Limited, the leading pre-employment screening firm for financial institutions, has backed the Financial Services Authority (FSA) in their stance on the data security measures finance firms should be employing to protect customer data.
In a paper released in April 2008, the FSA highlighted a number of examples of bad practice by financial services firms. Amongst their findings they discovered that generally a high level of vetting is being applied to senior staff, but junior staff and those working in areas that would allow them to view sensitive data are not being vetted appropriately. Most notably very few firms were found to be conducting criminal record checks on junior staff.
“We strongly advise our clients to determine the level of vetting required using a risk based approach rather than a rank based approach. Someone who works in a call centre is likely to have access to large volumes of customer data. So are they less of a risk than a senior manager? Not in our view, so why should they be vetted to a lower level?” says Alexandra Kelly, Director of Powerchex.
The FSA also found that some financial firms were subjecting temporary workers to less rigours vetting than permanently employed colleagues carrying out similar roles. Kelly believes that firms are starting to realise the biggest threat is from within.
“Temporary workers pose the same, if not a bigger risk to the company than permanent employees. Data Security is not just an IT issue. Firms should appoint a senior manager who heads a committee that has representation from all areas of the business, including Human Resources. And firms should also be asking their suppliers the same questions they ask themselves in regards to how sensitive data is kept safe.”
The FSA backed up their report by handing out a hefty fine to Merchant Securities Group Limited (Merchant Securities) in June 2008 for weak data security. Margaret Cole, Director of Enforcement at the FSA, said, “Reducing financial crime in the UK is a priority for the FSA and our recent data security report showed that many firms still need to do more to get it right. We will not wait until information has been lost or stolen before taking action against a firm. The level of the fine for a firm of this size should serve as a warning to others to take data security seriously.”
As the need for financial institutions to hold and transfer sensitive data increases, so does the risk they face. In the future financial firms are likely to employ more and more stringent data protection measures and their employees and suppliers can expect to be checked more thoroughly and more often.
London, June 19th, 2009. Powerchex Limited, the leading pre-employment screening firm for financial institutions, has backed the Financial Services Authority (FSA) in their stance on the data security measures finance firms should be employing to protect customer data.
In a paper released in April 2008, the FSA highlighted a number of examples of bad practice by financial services firms. Amongst their findings they discovered that generally a high level of vetting is being applied to senior staff, but junior staff and those working in areas that would allow them to view sensitive data are not being vetted appropriately. Most notably very few firms were found to be conducting criminal record checks on junior staff.
“We strongly advise our clients to determine the level of vetting required using a risk based approach rather than a rank based approach. Someone who works in a call centre is likely to have access to large volumes of customer data. So are they less of a risk than a senior manager? Not in our view, so why should they be vetted to a lower level?” says Alexandra Kelly, Director of Powerchex.
The FSA also found that some financial firms were subjecting temporary workers to less rigours vetting than permanently employed colleagues carrying out similar roles. Kelly believes that firms are starting to realise the biggest threat is from within.
“Temporary workers pose the same, if not a bigger risk to the company than permanent employees. Data Security is not just an IT issue. Firms should appoint a senior manager who heads a committee that has representation from all areas of the business, including Human Resources. And firms should also be asking their suppliers the same questions they ask themselves in regards to how sensitive data is kept safe.”
The FSA backed up their report by handing out a hefty fine to Merchant Securities Group Limited (Merchant Securities) in June 2008 for weak data security. Margaret Cole, Director of Enforcement at the FSA, said, “Reducing financial crime in the UK is a priority for the FSA and our recent data security report showed that many firms still need to do more to get it right. We will not wait until information has been lost or stolen before taking action against a firm. The level of the fine for a firm of this size should serve as a warning to others to take data security seriously.”
As the need for financial institutions to hold and transfer sensitive data increases, so does the risk they face. In the future financial firms are likely to employ more and more stringent data protection measures and their employees and suppliers can expect to be checked more thoroughly and more often.
Tuesday 16 June 2009
Powerchex supports the launch of PREFiT
In the past 3 years the Met Police, through its Operation Sterling has established a number of forums in key business sectors as part of its approach to combating fraud. PREFiT which is to be officially launched on June 19th at the New Scotland Yard, is the Vetting and Screening Industry’s Counter-Fraud Forum.
Recent high profile cases have brought vetting in the forefront of HR policy but due to the specialised nature of the searches, it is not practical for most organisations to conduct the full spectrum of checks in house. “For the past five years Powerchex has worked side by side with HR professionals in assisting them to strengthen their pre-employment screening policy. A wider independent forum such as PREFiT will provide further guidance and best practice in our efforts.” states Alexandra Kelly, Director of Powerchex.
Even though PREFiT currently represents a very small number of firms in the industry Powerchex has been assured that it is the full intention of the Metropolitan Police to make it an industry wide forum designed to support employers in their effort to prevent fraudsters entering the organisation through the false pre-text of seeking employment.
“PREFiT is a great initiative by the Met Police which Powerchex supports. The Vetting/Screening Industry has been gaining awareness amongst employers who have been the victims of economic crime. This initiative will strengthen and further support employers in their battle against fraud.” says Alexandra Kelly, Director of Powerchex.
In the financial services industry, screening has been the norm for several years. The FSA which is the industry regulator for financial firms has provided guidance as to the level of checks that organisations must perform prior to employment. In other sectors, screening is still very new and HR departments need support with policy.
In an email to Powerchex (powerchex.co.uk), Russell Day Detective Superintendent of the Specialist Crime Directorate Metropolitan Police stated: “PREFiT is designed to be complimentary to the NAPBS (the official industry body for the screening industry) and to enable an interface with the other industry forums to raise awareness and good practice to target harden businesses. It is an essential part of the emerging MPS Fraud Strategy 2009-2013 and compliments the recently launched National Fraud Strategy. The forums have additional benefits because it allows access to a target audience to provide counter-terrorism awareness training and to shape our response to the London 2012 Olympics.”
Employers and recruiters are increasingly expected to protect their organisations from potential fraudsters through screening, both at the hiring stage and periodically once employment has started. PREFiT in conjunction with NAPBS Europe will give them the tools to succeed in this goal.
Recent high profile cases have brought vetting in the forefront of HR policy but due to the specialised nature of the searches, it is not practical for most organisations to conduct the full spectrum of checks in house. “For the past five years Powerchex has worked side by side with HR professionals in assisting them to strengthen their pre-employment screening policy. A wider independent forum such as PREFiT will provide further guidance and best practice in our efforts.” states Alexandra Kelly, Director of Powerchex.
Even though PREFiT currently represents a very small number of firms in the industry Powerchex has been assured that it is the full intention of the Metropolitan Police to make it an industry wide forum designed to support employers in their effort to prevent fraudsters entering the organisation through the false pre-text of seeking employment.
“PREFiT is a great initiative by the Met Police which Powerchex supports. The Vetting/Screening Industry has been gaining awareness amongst employers who have been the victims of economic crime. This initiative will strengthen and further support employers in their battle against fraud.” says Alexandra Kelly, Director of Powerchex.
In the financial services industry, screening has been the norm for several years. The FSA which is the industry regulator for financial firms has provided guidance as to the level of checks that organisations must perform prior to employment. In other sectors, screening is still very new and HR departments need support with policy.
In an email to Powerchex (powerchex.co.uk), Russell Day Detective Superintendent of the Specialist Crime Directorate Metropolitan Police stated: “PREFiT is designed to be complimentary to the NAPBS (the official industry body for the screening industry) and to enable an interface with the other industry forums to raise awareness and good practice to target harden businesses. It is an essential part of the emerging MPS Fraud Strategy 2009-2013 and compliments the recently launched National Fraud Strategy. The forums have additional benefits because it allows access to a target audience to provide counter-terrorism awareness training and to shape our response to the London 2012 Olympics.”
Employers and recruiters are increasingly expected to protect their organisations from potential fraudsters through screening, both at the hiring stage and periodically once employment has started. PREFiT in conjunction with NAPBS Europe will give them the tools to succeed in this goal.
Thursday 4 June 2009
Don't they ever learn? More CV lies on the Apprentice
Lorraine Tighe has been caught out lying on her CV stating that's she has worked for a company longer than she actually did.
The Apprentice wannabe's lie is exposed on the show when she is grilled in an interview from Sir Alan Sugar's close business friends.
Karren Brady, the managing director of Birmingham City Football Club tells her: "If intuition is your gift, why didn't you use it to put your correct dates of employment down?
"You've overstated your length of time working in your current employment by 12 months, which is quite significant."
Claiming it was a "misprint", Tighe replies: "I suppose I have not fully succeeded in the way that I think I am capable of."
Brady adds: "So is that why you lied on your CV?"
Lorraine, looked puzzled and said, or it must have been a typo... Easy to see why this sort of answer can destroy an applicant's professional credibility, what is not so easy, is to understand why she did it. She knew her CV would be scrutinized and she knew her references would be checked.
It is so common for people to think they can get away with it. For some reason, that we have yet to understand, applicants who know that they will be checked, keep on lying. In this difficult job market this can be career suicide, don't they see it?
The Apprentice wannabe's lie is exposed on the show when she is grilled in an interview from Sir Alan Sugar's close business friends.
Karren Brady, the managing director of Birmingham City Football Club tells her: "If intuition is your gift, why didn't you use it to put your correct dates of employment down?
"You've overstated your length of time working in your current employment by 12 months, which is quite significant."
Claiming it was a "misprint", Tighe replies: "I suppose I have not fully succeeded in the way that I think I am capable of."
Brady adds: "So is that why you lied on your CV?"
Lorraine, looked puzzled and said, or it must have been a typo... Easy to see why this sort of answer can destroy an applicant's professional credibility, what is not so easy, is to understand why she did it. She knew her CV would be scrutinized and she knew her references would be checked.
It is so common for people to think they can get away with it. For some reason, that we have yet to understand, applicants who know that they will be checked, keep on lying. In this difficult job market this can be career suicide, don't they see it?
Tuesday 19 May 2009
When is an expert, an expert?
It took a bitter divorce case for Ms Labeur to be discovered for the fraud she is. Her husband decided to inform the authorities during the divorce; can one safely assume that she would have gone undetected otherwise? It is cases like this that demonstrate the huge pitfalls of not peforming even the most cursory checks before appointing an employee or an expert. This will undoubtedly lead to lawsuits, as the outcome of several cases may have to be re-examined.
____________________________________________________
Adam Sage in Paris reports:
Régine Labeur was hailed as a respected psychologist whose evidence was pivotal in more than 400 trials in the Dordogne, southwest France. She testified in criminal cases, explaining, for instance, the hidden character of serial rapists or the trauma suffered by families and friends of murder victims.
She also played a central role in many divorce cases, assessing the emotional stability of parents seeking the residency of their children. So when officials discovered that she had apparently never qualified as a psychologist, there was widespread stupefaction.
Mrs Labeur, 53, is accused of fooling judicial authorities with false certificates that went undiscovered for four years.
She has been placed under formal investigation on suspicion of fraud and usurping the title of psychologist and faces a maximum sentence of five years in prison and a fine of €75,000 (£67,000).
Maître Frédérique Pohu-Panier, her lawyer, declined to comment on the allegations. The inquiry is understood to have started when Mrs Labeur’s husband, from whom she is divorcing, told police that she lacked qualifications.
“It’s incomprehensible,” Françoise Lorrin, another judicial psychologist in the Dordogne, said. “When I applied, I submitted my degrees and also scientific publications, which prove your competence.” Le Parisien newspaper said there was no record that Mrs Labeur had published a single paper.
“Certain filters didn’t work,” Yves Squercioni, the state prosecutor in Périgueux in the Dordogne, said. “You can’t become a judicial expert through improvisation.”
Mr Squercioni ruled out a review of the cases in which Mrs Labeur had given evidence, despite the fraud claims. However, a lawyer in the Dordogne told The Times: “A number of us are looking at the possibility of lodging appeals. It is difficult because the French judicial system is always very reluctant to reopen cases that have been judged.
“But it might be possible to overturn rulings in cases where her reports were critical — in custody cases where she wrote that a father was psychologically incapable of looking after his children, for example.”
The scandal is reminiscent of the French film Intimate Stranger, in which the actor Fabrice Luchini played a false psychoanalyst. It also highlights the importance of l’expert psychologue in the French judicial system.
Last month, for example, Mrs Labeur was called to Dordogne Criminal Court to tell the jury about Thierry Caballero, a serial rapist, after a consultation with him while he was in prison awaiting trial.
Her words were damning: “He is far removed from reality as far as his actions are concerned, he does not feel any remorse, he is incapable of controlling his urges.” She said that Caballero, who was sentenced to 14 years in jail, had a “fragile” character and added: “Perhaps he has a hidden side.”
According to Le Parisien, Mrs Labeur earned €60,000 a year for her reports for French justice — a significant sum given that many of France’s 40,000 fully qualified psychologists struggle to make a living.
____________________________________________________
Adam Sage in Paris reports:
Régine Labeur was hailed as a respected psychologist whose evidence was pivotal in more than 400 trials in the Dordogne, southwest France. She testified in criminal cases, explaining, for instance, the hidden character of serial rapists or the trauma suffered by families and friends of murder victims.
She also played a central role in many divorce cases, assessing the emotional stability of parents seeking the residency of their children. So when officials discovered that she had apparently never qualified as a psychologist, there was widespread stupefaction.
Mrs Labeur, 53, is accused of fooling judicial authorities with false certificates that went undiscovered for four years.
She has been placed under formal investigation on suspicion of fraud and usurping the title of psychologist and faces a maximum sentence of five years in prison and a fine of €75,000 (£67,000).
Maître Frédérique Pohu-Panier, her lawyer, declined to comment on the allegations. The inquiry is understood to have started when Mrs Labeur’s husband, from whom she is divorcing, told police that she lacked qualifications.
“It’s incomprehensible,” Françoise Lorrin, another judicial psychologist in the Dordogne, said. “When I applied, I submitted my degrees and also scientific publications, which prove your competence.” Le Parisien newspaper said there was no record that Mrs Labeur had published a single paper.
“Certain filters didn’t work,” Yves Squercioni, the state prosecutor in Périgueux in the Dordogne, said. “You can’t become a judicial expert through improvisation.”
Mr Squercioni ruled out a review of the cases in which Mrs Labeur had given evidence, despite the fraud claims. However, a lawyer in the Dordogne told The Times: “A number of us are looking at the possibility of lodging appeals. It is difficult because the French judicial system is always very reluctant to reopen cases that have been judged.
“But it might be possible to overturn rulings in cases where her reports were critical — in custody cases where she wrote that a father was psychologically incapable of looking after his children, for example.”
The scandal is reminiscent of the French film Intimate Stranger, in which the actor Fabrice Luchini played a false psychoanalyst. It also highlights the importance of l’expert psychologue in the French judicial system.
Last month, for example, Mrs Labeur was called to Dordogne Criminal Court to tell the jury about Thierry Caballero, a serial rapist, after a consultation with him while he was in prison awaiting trial.
Her words were damning: “He is far removed from reality as far as his actions are concerned, he does not feel any remorse, he is incapable of controlling his urges.” She said that Caballero, who was sentenced to 14 years in jail, had a “fragile” character and added: “Perhaps he has a hidden side.”
According to Le Parisien, Mrs Labeur earned €60,000 a year for her reports for French justice — a significant sum given that many of France’s 40,000 fully qualified psychologists struggle to make a living.
Wednesday 13 May 2009
Should there be pre-employment screening to fish out terrorists?
The FSA has warned again and again about the risk of potential terrorists infiltrating the UK financial systems through gaining employement in permanent or contracting/temp post. Most financial institutions conduct pretty rigorous checks on their permanent employees, but the majority of temps and contractors go unchecked, thus providing an easy route to entry.
Sanctions checks are a quick and cost efffective way to spot any applicant who may be a suspected or convicted terrorist or money launderer. Make sure that your pre-employment checks include sanctions as part of the basic background screening of permanent employees and contractors alike.
___________________________________________________________________________________
Angsuman Chakraborty reports on his blog:
I know most of you would be outraged at such a question. However just for a moment take a look at the biodata of a jehadi who worked as a senior software engineer / architect at Yahoo. He is a capable technologist, has deep understanding of Linux, Unix & nginx, httpd and other technologies. He is a must hire at most companies he will apply to. However the situation changes drastically if you knew he was a hardcore jehadi and responsible for mass-murder / terrorist attacks.
The key question obviously is how prevalent are such hi-tech jehadis?
Worldwide Muslim fundamentalists are aggressively enlisting the help of computer professionals for hacking (Peerbhoy hacked unsecured wi-fi networks to spread terror threats and more). Peerbhoy's mentor himself enlisted 8-10 hi-tech professionals. He had one person dedicated to bring around Peerbhoy to their cause. They pamper such professionals, tell them about the plight of moslem's worldwide and indoctrinate them in the cause of jihad (and houris?).
So I would say there is a distinct possibility that any company can face the plight of Yahoo. Imagine the embarrassment of Yahoo worldwide for hiring a muslim terrorist. Would you like to work for a company which hires terrorists, albeit unknowingly? I don't blame them; nevertheless it is bad PR. It tarnishes the image of the company, may even create fear within employees and definitely harrassment for all.
In light of apparent surge in hi-tech jihadis, does it make sense to have a system to screen out potential trouble-makers?
Theoretically, can we even think of a set of questions which can screen out potential terrorists? Remember the lame questions you get asked at the airport security check-in? That would be the worse end of the spectrum and I don't think will give any benefit.
Only subtle psychological questioning can potentially reveal such people. I think terrorists are common people who probably have a bad gene which somehow allows them to forget the value of human life. It appears the attraction of several dozen virgins in heaven is also rather hard to ignore. Should we look for repressed personality, people who feel persecuted in some way by the world? This is such a wide area to explore.
I am sure many entrepreneurs are thinking about it too, even if they won't admit it. What is your take on this issue?
Sanctions checks are a quick and cost efffective way to spot any applicant who may be a suspected or convicted terrorist or money launderer. Make sure that your pre-employment checks include sanctions as part of the basic background screening of permanent employees and contractors alike.
___________________________________________________________________________________
Angsuman Chakraborty reports on his blog:
I know most of you would be outraged at such a question. However just for a moment take a look at the biodata of a jehadi who worked as a senior software engineer / architect at Yahoo. He is a capable technologist, has deep understanding of Linux, Unix & nginx, httpd and other technologies. He is a must hire at most companies he will apply to. However the situation changes drastically if you knew he was a hardcore jehadi and responsible for mass-murder / terrorist attacks.
The key question obviously is how prevalent are such hi-tech jehadis?
Worldwide Muslim fundamentalists are aggressively enlisting the help of computer professionals for hacking (Peerbhoy hacked unsecured wi-fi networks to spread terror threats and more). Peerbhoy's mentor himself enlisted 8-10 hi-tech professionals. He had one person dedicated to bring around Peerbhoy to their cause. They pamper such professionals, tell them about the plight of moslem's worldwide and indoctrinate them in the cause of jihad (and houris?).
So I would say there is a distinct possibility that any company can face the plight of Yahoo. Imagine the embarrassment of Yahoo worldwide for hiring a muslim terrorist. Would you like to work for a company which hires terrorists, albeit unknowingly? I don't blame them; nevertheless it is bad PR. It tarnishes the image of the company, may even create fear within employees and definitely harrassment for all.
In light of apparent surge in hi-tech jihadis, does it make sense to have a system to screen out potential trouble-makers?
Theoretically, can we even think of a set of questions which can screen out potential terrorists? Remember the lame questions you get asked at the airport security check-in? That would be the worse end of the spectrum and I don't think will give any benefit.
Only subtle psychological questioning can potentially reveal such people. I think terrorists are common people who probably have a bad gene which somehow allows them to forget the value of human life. It appears the attraction of several dozen virgins in heaven is also rather hard to ignore. Should we look for repressed personality, people who feel persecuted in some way by the world? This is such a wide area to explore.
I am sure many entrepreneurs are thinking about it too, even if they won't admit it. What is your take on this issue?
Wednesday 6 May 2009
Company Directors are not immune from fraud
It is not unusual for companies to neglect applying their normal pre-employment screening practices when it comes to their directors, board members and non-executive directors. Research released by the UK's Insolvency Service showed that there is a significant increase in criminal malpractice amongst company directors.
The directors of 91 companies were banned for financial crime over the year as more directors turned to fraud to try to salvage something for themselves from ailing companies. In this tough economic times, companies should also make an extra effort to conduct proper due dilligence on their suppliers, especially those suppliers who have access to sensitive company information, or client data.
Guy Logan reports for Personnel Today:
_________________________________________________________________
HR must be on watch for directors’ fraud
Guy Logan05 May 2009 14:11
HR must be extra-vigilant against a rise in fraud by company directors during the recession, a lawyer has warned.
Statistics published by the government's UK Insolvency Service at the weekend revealed that the number of directors banned for criminal malpractice jumped by almost one third (31%), to 1,852 directors who were charged in the 12 months to March.
Disqualification proceedings launched against directors for crimes such as fraud or theft rose by 72%, while cases of misappropriation of assets grew by almost 20%.
Edward Starling, solicitor at law firm Wedlake Bell, warned that company directors were just as likely to commit fraud as junior employees.
"It's well known that fraud increases in the recession, but it's possible that some counter-fraud departments miss serious fraud because they are too focused on the smaller fish [more junior employees]," he told Personnel Today.
"The increase in disqualification cases being launched over the past year is huge, and this number will only rise in the coming months."
Starling added that limited resources for the Insolvency Service, which unearthed the majority of cases of malpractice by directors, would mean many bosses would elude justice.
Research last year found one in five employees admitted to committing fraud by exaggerating expense claims.
The directors of 91 companies were banned for financial crime over the year as more directors turned to fraud to try to salvage something for themselves from ailing companies. In this tough economic times, companies should also make an extra effort to conduct proper due dilligence on their suppliers, especially those suppliers who have access to sensitive company information, or client data.
Guy Logan reports for Personnel Today:
_________________________________________________________________
HR must be on watch for directors’ fraud
Guy Logan05 May 2009 14:11
HR must be extra-vigilant against a rise in fraud by company directors during the recession, a lawyer has warned.
Statistics published by the government's UK Insolvency Service at the weekend revealed that the number of directors banned for criminal malpractice jumped by almost one third (31%), to 1,852 directors who were charged in the 12 months to March.
Disqualification proceedings launched against directors for crimes such as fraud or theft rose by 72%, while cases of misappropriation of assets grew by almost 20%.
Edward Starling, solicitor at law firm Wedlake Bell, warned that company directors were just as likely to commit fraud as junior employees.
"It's well known that fraud increases in the recession, but it's possible that some counter-fraud departments miss serious fraud because they are too focused on the smaller fish [more junior employees]," he told Personnel Today.
"The increase in disqualification cases being launched over the past year is huge, and this number will only rise in the coming months."
Starling added that limited resources for the Insolvency Service, which unearthed the majority of cases of malpractice by directors, would mean many bosses would elude justice.
Research last year found one in five employees admitted to committing fraud by exaggerating expense claims.
Tuesday 28 April 2009
E-Verify in Hot Water about Error Rate
An SHRM (Society for Human Resource Management http://shrmjax.org/pdfs/08-0447%202nd%20Quarter%202008.pdf) backed bill launched an employment verification debate on the other side of the pond. Apparently monster-sized databases are debated around the world, not just in the UK.
__________________________________________________________________________
Mark Schoeff Jr reports for Workforce Week
With momentum building for Congress to address comprehensive immigration reform later this year, two members of the House have introduced a bill to put employment verification at the center of the debate.
Written by Reps. Gabrielle Giffords, D-Arizona, and Sam Johnson, R-Texas, the measure would establish a mandatory electronic verification system that replaces an existing government-run system that has been roundly criticized by employer groups.
Giffords and Johnson hope their bill, the New Employee Verification Act, will either be the foundation for work-site enforcement in a broader immigration bill or move through Congress on its own.
The bill was introduced Wednesday, April 22, and announced by Giffords and Johnson on Thursday, April 23. It was originally offered in the previous Congress but had to be reintroduced because it did not become law.
The legislation mandates that all employers sign up for the Electronic Employment Verification System, which is based on the new-hire system used in each state to enforce child support payments. About 90 percent of employers use the new-hire system already.
Information for recently hired employees would be checked against Social Security and Department of Homeland Security databases to determine work eligibility. The system would eliminate the I-9 immigration form.
Alternatively, employers could register for the Secure Electronic Employment Verification System, a network of government-certified private sector companies that would authenticate a workers’ identity through a biometric identifier like a thumbprint.
The bill would establish civil and criminal penalties for employers that knowingly hire illegal immigrants.
Giffords and Johnson have been working with the HR Initiative for a Legal Workforce on the legislation. The organization is led by the Society for Human Resource Management and also includes the HR Policy Association and the National Association of Manufacturers.
The HR groups have led a charge against E-Verify, the government-run electronic verification system that is currently used on a voluntary basis by 118,917 employers.
“E-Verify’s significant error rate and reliance on paper-based identity documents often deny legal workers employment and can lead to fraud and identity theft,” the HR Initiative wrote in an April 23 letter to members of Congress. “Employers, in turn, are left vulnerable to sanctions through no fault of their own.”
E-Verify detractors say that the 4.1 percent error rate in the Social Security database could lead to millions of people being incorrectly ruled ineligible for work.
E-Verify proponents, which include many Republicans and conservative Democrats, say that the system confirms 96 percent of queries instantly and has an error rate of less than 1 percent.
Like E-Verify, the Electronic Employee Verification System would rely on the Social Security database. But the Giffords-Johnson bill requires that the Social Security information be cleaned up before the new system is launched.
In a conference call with reporters Thursday, Giffords called the proposal a “simple, effective, balanced alternative to E-Verify. It is a realistic piece of legislation.”
She also touted a provision that would establish federal pre-emption of state laws on employment verification. Her home state of Arizona was the first of several to mandate that employers use E-Verify—an experiment that is not succeeding, according to Giffords.
“Immigration is in the federal purview,” she said. “We should be dealing with it at the congressional level, not piecemeal state by state.”
It’s not yet clear when Congress will take up immigration reform. A comprehensive bill sparked political combustion in 2007 and died in the Senate. In the last couple weeks, the Obama administration has indicated it wants to address comprehensive immigration this year.
So far, individual dimensions of reform—such as verification and employment visas—have not been able to move on their own. But E-Verify is scheduled to expire on September 30, which might give work-site enforcement separate momentum.
Johnson says the electronic verification bill doesn’t have to be held up until comprehensive reform is complete.
“This year, we stand a great chance of passing it out of the House and Senate,” Johnson said. “It doesn’t have to wait. It can be combined later.”
As the immigration debate gets under way, HR organizations are trying to influence the outcome, especially on verification.
“SHRM feels strongly that employers should be part of the solution to illegal immigration,” said Mike Aitken, SHRM director of government affairs.
__________________________________________________________________________
Mark Schoeff Jr reports for Workforce Week
With momentum building for Congress to address comprehensive immigration reform later this year, two members of the House have introduced a bill to put employment verification at the center of the debate.
Written by Reps. Gabrielle Giffords, D-Arizona, and Sam Johnson, R-Texas, the measure would establish a mandatory electronic verification system that replaces an existing government-run system that has been roundly criticized by employer groups.
Giffords and Johnson hope their bill, the New Employee Verification Act, will either be the foundation for work-site enforcement in a broader immigration bill or move through Congress on its own.
The bill was introduced Wednesday, April 22, and announced by Giffords and Johnson on Thursday, April 23. It was originally offered in the previous Congress but had to be reintroduced because it did not become law.
The legislation mandates that all employers sign up for the Electronic Employment Verification System, which is based on the new-hire system used in each state to enforce child support payments. About 90 percent of employers use the new-hire system already.
Information for recently hired employees would be checked against Social Security and Department of Homeland Security databases to determine work eligibility. The system would eliminate the I-9 immigration form.
Alternatively, employers could register for the Secure Electronic Employment Verification System, a network of government-certified private sector companies that would authenticate a workers’ identity through a biometric identifier like a thumbprint.
The bill would establish civil and criminal penalties for employers that knowingly hire illegal immigrants.
Giffords and Johnson have been working with the HR Initiative for a Legal Workforce on the legislation. The organization is led by the Society for Human Resource Management and also includes the HR Policy Association and the National Association of Manufacturers.
The HR groups have led a charge against E-Verify, the government-run electronic verification system that is currently used on a voluntary basis by 118,917 employers.
“E-Verify’s significant error rate and reliance on paper-based identity documents often deny legal workers employment and can lead to fraud and identity theft,” the HR Initiative wrote in an April 23 letter to members of Congress. “Employers, in turn, are left vulnerable to sanctions through no fault of their own.”
E-Verify detractors say that the 4.1 percent error rate in the Social Security database could lead to millions of people being incorrectly ruled ineligible for work.
E-Verify proponents, which include many Republicans and conservative Democrats, say that the system confirms 96 percent of queries instantly and has an error rate of less than 1 percent.
Like E-Verify, the Electronic Employee Verification System would rely on the Social Security database. But the Giffords-Johnson bill requires that the Social Security information be cleaned up before the new system is launched.
In a conference call with reporters Thursday, Giffords called the proposal a “simple, effective, balanced alternative to E-Verify. It is a realistic piece of legislation.”
She also touted a provision that would establish federal pre-emption of state laws on employment verification. Her home state of Arizona was the first of several to mandate that employers use E-Verify—an experiment that is not succeeding, according to Giffords.
“Immigration is in the federal purview,” she said. “We should be dealing with it at the congressional level, not piecemeal state by state.”
It’s not yet clear when Congress will take up immigration reform. A comprehensive bill sparked political combustion in 2007 and died in the Senate. In the last couple weeks, the Obama administration has indicated it wants to address comprehensive immigration this year.
So far, individual dimensions of reform—such as verification and employment visas—have not been able to move on their own. But E-Verify is scheduled to expire on September 30, which might give work-site enforcement separate momentum.
Johnson says the electronic verification bill doesn’t have to be held up until comprehensive reform is complete.
“This year, we stand a great chance of passing it out of the House and Senate,” Johnson said. “It doesn’t have to wait. It can be combined later.”
As the immigration debate gets under way, HR organizations are trying to influence the outcome, especially on verification.
“SHRM feels strongly that employers should be part of the solution to illegal immigration,” said Mike Aitken, SHRM director of government affairs.
Subscribe to:
Posts (Atom)
