ASIC and Standards Australia has joined forces to produce a new guide to help financial planning principals weed out bad apples when recruiting.
The Reference Checking in the Financial Services Industry handbook attempts to help the industry seek and provide employee references, as well as sift out dishonest, incompetent or unethical financial advisers.
"We have seen that the reputation of any firm can be painstakingly built over a number of years but seriously damaged overnight by an irresponsible adviser," ASIC chairman Tony D'Aloisio said.
"As the saying goes, 'one bad apple can ruin the whole barrel', which is why, together with industry, ASIC is encouraging all employers to share this type of information so that dubious or dishonest conduct does not go undetected and so that we maintain consumer confidence in the financial services industry."
ASIC's Bad Apples project aims to stop financial advisers with dubious employment records who resign from one position and move to another firm that is unaware of their history.
The guide was designed in consultation with financial services industry representatives and is consistent with existing law including the National Privacy Principles.
Standards Australia has also simultaneously released a handbook applicable to all employers.
The handbooks provide guidance on obtaining relevant, factual, accurate and balanced information through rigorous reference checks, Standards Australia chief operating officer John Tucker said.
ASIC's website has been updated to enable pre-FSR searches. The handbook can be downloaded at www.asic.gov.au/referencechecking
