Hiring decisions do not exist in isolation. When a professional moves between a bank and an insurer, the conduct history they carry with them does not disappear. Yet until recently, Hong Kong’s workforce integrity framework had no mechanism to track that history across sectors.
As one of Asia-Pacific’s leading international financial centres, Hong Kong continues to strengthen regulatory frameworks designed to support market integrity, investor confidence, and workforce trust. Regulators increasingly expect organisations to look beyond traditional employment verification and consider how conduct-related information can support stronger hiring decisions across regulated industries.
That expectation is evolving further on 1 July 2026.
Hong Kong’s financial regulators are expanding their reference-checking requirements beyond the banking sector to encompass the insurance industry. For the first time, banks and insurers will be required to share conduct-related reference information on prospective intermediaries under a formalised cross-sector arrangement. The objective is to strengthen governance, improve transparency, and help reduce the risk of misconduct migrating undetected between sectors.
Hong Kong’s financial services sector remains one of the most internationally connected markets in Asia-Pacific. As professionals increasingly move between banking, insurance, and other regulated sectors, regulators continue to strengthen workforce integrity frameworks designed to support transparency, accountability, and public confidence in the financial system.
For HR directors, compliance officers, talent acquisition leaders, and hiring managers across Hong Kong’s financial services sector, understanding what is changing, who is affected, and how to prepare is now a compliance priority.
This article explains:
- What Phase 3A means for banking and insurance organisations
- Which roles fall within scope
- Employer responsibilities under the new framework
- Practical steps organisations can take before implementation
Why Is Hong Kong Expanding Reference-Checking Requirements?
The expansion of Hong Kong’s reference-checking framework reflects a broader regulatory focus on workforce integrity, accountability, and conduct risk management across financial services.
Strengthening Workforce Integrity
Hong Kong’s financial services sector employs close to 100,000 professionals who provide a broad range of regulated activities. The integrity of that workforce is not simply an internal HR concern; it is foundational to public trust in the financial system. Regulators have consistently signalled that conduct risk does not end at the door of one institution when a professional moves to another.
If information is not appropriately shared, individuals with a history of misconduct may move between institutions without prospective employers having visibility into relevant concerns.
Reducing Misconduct Risks
The Hong Kong Monetary Authority (HKMA) has long recognised the risks posed by what it describes as “rolling bad apples” — individuals with a history of misconduct who move between financial institutions without that history being disclosed during recruitment.
Reference checking is a direct regulatory response to that risk.
By creating a structured process for sharing conduct-related information, regulators aim to help organisations make more informed hiring decisions while strengthening accountability across the financial services sector.
Protecting Consumers and Investors
Banking and insurance intermediaries often interact directly with consumers and investors. Misconduct in these roles can expose customers to financial harm, undermine confidence in regulated institutions, and damage trust in the broader financial system.
The expansion of reference-checking requirements reflects regulators’ commitment to protecting consumers through stronger workforce governance.
Raising Governance Standards
The expansion also aligns with a broader regulatory focus on culture, accountability, and governance.
The HKMA has repeatedly emphasised the importance of strong governance structures, effective performance management frameworks, and robust conduct oversight. Reference checking forms part of that wider strategy by helping organisations identify potential conduct risks before appointments are made.
Supporting Trust Across Financial Services
With over 110,000 life insurance intermediaries across banking and insurance combined, staff movement between banking and insurance is common across Hong Kong’s financial services sector. As professionals transition between regulated organisations, regulators increasingly view cross-sector visibility as necessary to maintain workforce integrity and support trust across the industry.
The new arrangement reflects the reality that conduct risks do not stop at sector boundaries.
A Brief History of Hong Kong’s Mandatory Reference Checking Framework
The Introduction of MRC
Hong Kong’s Mandatory Reference Checking (MRC) Scheme was introduced by the HKMA in 2022 and became operational in 2023. The scheme was designed to standardise the way conduct-related information is exchanged between Authorised Institutions (AIs) when hiring for senior and regulated roles.
The framework introduced:
- Standardised reference-checking templates
- Defined response timelines
- Consistent disclosure requirements
- A seven-year lookback period for conduct-related information
The objective was to create a more consistent and transparent hiring process while reducing the risk of misconduct remaining undisclosed during recruitment.
Key Milestones: The Road to Cross-Sector Compliance
MRC Scheme Launched
2022–2023
The HKMA introduced the Mandatory Reference Checking (MRC) Scheme to standardise the exchange of conduct-related information between Authorised Institutions and strengthen workforce integrity within Hong Kong’s banking sector.
Phase 2: Expansion
September 2025
Coverage expanded significantly from approximately 3,500 senior banking roles to more than 50,000 individuals engaged in securities-related, insurance-related, and Mandatory Provident Fund (MPF)-related regulated activities.
This marked a major increase in the number of hiring decisions subject to conduct-related reference checking requirements.
Phase 3A: Go-Live
1 July 2026
The Cross-Sector Reference Checking Arrangement comes into effect. For the first time, conduct-related reference information will flow between banking and insurance organisations, creating a formal mechanism for cross-sector workforce integrity checks.
Future Phases
Post-July 2026
Regulators are expected to review implementation outcomes and consider whether the framework should be expanded to additional regulated financial sectors in the future.
How MRC Has Evolved
The Mandatory Reference Checking framework has expanded significantly since its original implementation. Phase 2 brought a substantial increase in the number of regulated employees covered by the scheme and introduced new operational demands for HR, compliance, and governance teams. The results to date demonstrate why regulators continue to support the framework.
By the end of 2025, approximately 2,800 reference checks had been completed under the MRC Scheme, with 29 identifying negative conduct-related information. While representing a relatively small proportion of total checks, regulators have highlighted these findings as evidence that the framework is successfully identifying conduct risks that may otherwise have remained undisclosed.
What Is Changing on 1 July 2026?
Phase 3A of the Cross-Sector Reference Checking Arrangement
The Cross-Sector Reference Checking Arrangement between the banking and insurance sectors takes effect on 1 July 2026.
According to the joint circular issued by the Hong Kong Monetary Authority (HKMA) and the Insurance Authority (IA), Phase 3A applies to the appointment of individual insurance intermediaries engaged in long-term insurance business by Authorised Institutions (AIs) that are also licensed insurance agencies under the Insurance Ordinance (“relevant AIs”), as well as by insurance entities.
The arrangement enables participating organisations to obtain and share prescribed reference information through the existing Banking Mandatory Reference Checking (MRC) Scheme and Insurance Reference Checking (RC) Scheme frameworks.
For organisations operating across banking and insurance sectors, Phase 3A expands the scope of existing reference-checking obligations and introduces a formal mechanism for cross-sector information exchange.
How Reference Checks Will Flow Across Sectors
Phase 3A introduces a formal mechanism for exchanging prescribed reference information between banking and insurance organisations.
Where an insurance entity appoints an in-scope individual who was previously appointed by a relevant AI, the insurance entity may request reference information in accordance with the Insurance Reference Checking Scheme. Similarly, where a relevant AI appoints an in-scope individual previously appointed by an insurance entity, the AI may conduct reference checking in accordance with the Banking Mandatory Reference Checking Scheme.
The arrangement is intended to support more informed hiring decisions by enabling the exchange of prescribed reference information across sector boundaries.
4 Core Employer Responsibilities Under Phase 3A
The implementation of Phase 3A may prompt organisations to review their existing reference-checking processes and internal procedures to ensure alignment with the new framework.
1. Conducting Reference Requests
When appointing in-scope individuals, employers are required to obtain reference information in accordance with the Cross-Sector Reference Checking framework and the prescribed questionnaire requirements issued by the relevant authorities.
Organisations should ensure that recruitment and onboarding processes are updated to accommodate these obligations and support efficient hiring timelines.
2. Responding to Reference Requests Within Required Timeframes
Employers are not only responsible for requesting information but also for responding when requests are received.
- Banking organisations are generally expected to respond within one month under the MRC framework.
- Insurance organisations are generally expected to respond within 15 working days under the Insurance Authority’s Reference Checking Scheme.
Timely and accurate responses help support compliance while maintaining trust across the financial services sector.
3. Maintaining Appropriate Conduct Records
The ability to respond effectively depends on maintaining accurate and accessible records. Organisations should review record-retention practices and determine whether conduct-related information covering the seven-year lookback period can be retrieved efficiently when required.
Strong documentation processes can help reduce operational challenges and support compliance obligations.
4. Strengthening Internal Governance Controls
Organisations may wish to consider how responsibility for Cross-Sector Reference Checking requests and responses will be managed internally to support consistent implementation of the framework.
Supporting Workforce Integrity Across Banking and Insurance
First Advantage supports financial services organisations across Hong Kong and APAC with workforce screening, employment verification, identity verification, and reference-checking programmes. Since the introduction of the MRC framework, First Advantage has supported organisations operating within regulated hiring environments where compliance, governance, and workforce integrity are critical considerations.
Our experience includes supporting organisations with:
- Employment verification
- Identity verification
- Workforce screening programmes
- Reference-checking processes
- Compliance-focused hiring workflows
For organisations already operating under the MRC framework, the transition to Phase 3A may build upon existing governance structures. For insurance organisations approaching these requirements for the first time, establishing scalable and compliant processes now may help support a smoother implementation journey.
First Advantage’s experience supporting Authorised Institutions since the inception of the MRC Scheme means organisations working with us are supported by a partner that understands the regulatory environment, the operational demands, and the governance requirements that compliance-driven hiring in Hong Kong’s financial services sector demands.
Preparing for Implementation
With Phase 3A taking effect on 1 July 2026, organisations within scope should review their existing reference-checking processes, policies, procedures, and record-management practices to determine whether they align with the requirements of the Cross-Sector Reference Checking Arrangement.
The HKMA and IA have stated that all AIs and insurance entities are expected to establish the necessary internal controls, policies, and procedures to support effective implementation of the arrangement. Repeated or systematic failures to comply may be viewed as indicators of weaknesses in governance or internal controls and may result in supervisory follow-up by the regulators.
Organisations should review the framework requirements and assess whether their existing reference-checking processes, procedures, and timelines align with the new obligations.
Key Takeaways
- Hong Kong’s Cross-Sector Reference Checking Arrangement takes effect on 1 July 2026.
- Banking and insurance organisations will exchange conduct-related reference information for certain appointments.
- Phase 3A extends workforce integrity controls across sector boundaries.
- Employers should review governance, hiring, and record-management procedures now.
- Early preparation may support smoother implementation and stronger compliance outcomes.
- Workforce integrity continues to be a key regulatory priority across Hong Kong’s financial services sector
Supporting Workforce Integrity and Compliance
As workforce integrity requirements continue to evolve across Hong Kong’s financial services sector, organisations require screening partners that understand both regulatory expectations and operational realities.
First Advantage supports financial services organisations across Hong Kong and APAC with workforce screening, employment verification, identity verification, and compliance-focused hiring solutions designed to support regulatory compliance and informed hiring decisions.
Contact First Advantage to learn more about our workforce-screening and employment-verification solutions.
Frequently Asked Questions
What is Mandatory Reference Checking (MRC) in Hong Kong?
Mandatory Reference Checking (MRC) is a framework endorsed by the HKMA that requires Authorised Institutions to obtain conduct-related reference information when appointing individuals into specified roles. The framework includes standardised templates, response procedures, and a seven-year lookback period for conduct-related information.
What changes take effect on 1 July 2026?
Phase 3A of the Cross-Sector Reference Checking Arrangement takes effect on 1 July 2026. The arrangement applies to certain appointments involving individual insurance intermediaries engaged in long-term insurance business and enables prescribed reference information to be exchanged between relevant banking and insurance organisations.
What is Phase 3A of the Cross-Sector Reference Checking Arrangement?
Phase 3A is the first implementation phase of the cross-sector arrangement between the banking and insurance sectors. It applies to appointments involving individual insurance intermediaries engaged in long-term insurance business by relevant AIs and insurance entities.
Who Is Required to Conduct Reference Checks Under Phase 3A?
Phase 3A applies to Authorised Institutions that are also licensed insurance agencies (“relevant AIs”), authorised insurers, licensed insurance agencies, and licensed insurance broker companies when appointing certain individuals engaged in long-term insurance business. Organisations should refer to the HKMA–IA guidance to determine whether a specific appointment falls within scope.
Can information be shared between banks and insurers?
Yes. The arrangement allows relevant banking and insurance organisations to obtain and share prescribed reference information relating to in-scope individuals in accordance with the Banking MRC Scheme and Insurance RC Scheme requirements.
How many years of information are covered?
The arrangement generally requires reference information covering the seven years preceding the appointment, consistent with the Banking MRC Scheme and Insurance RC Scheme requirements.
What information may be disclosed during a reference check?
Organisations should request and provide information in accordance with the prescribed templates, procedures, and requirements established under the applicable Banking MRC Scheme or Insurance RC Scheme.
How quickly must employers respond to reference requests?
Under the Banking MRC Scheme, reference-providing Authorised Institutions should endeavour to respond as soon as practicable and, in any event, within one month. Under the Insurance RC Scheme, responses are generally required within the prescribed timeframe, typically within 15 calendar days.
Will there be a Phase 3B?
The HKMA and IA have stated that they intend to conduct a post-implementation review following Phase 3A. The regulators have indicated that the common goal for a future Phase 3B would be to extend cross-sector reference checking to all Authorised Institutions and insurance entities covering additional in-scope individuals currently subject to the Banking MRC Scheme and Insurance RC Scheme.
Sources:
- https://brdr.hkma.gov.hk/eng/doc-ldg/docId/20260512-4-EN
- https://www.hkma.gov.hk/eng/news-and-media/speeches/2026/06/20260602-1/
- https://www.ia.org.hk/
- https://fintechnews.hk/38832/various/banking-insurance-reference-checks-hkma-ia/
- https://www.thestandard.com.hk/finance/article/331924/Cross-sector-background-check-scheme-to-cover-life-insurance-agents-in-banks-insurers-in-July
