Are employee credit checks legal in Singapore?

Is the screening process helping or harming HR?

Are employee credit checks legal in Singapore?

A Singaporean recently highlighted the financial industry’s recruitment practice of conducting credit checks.

In a forum letter to The Straits Times, he questioned why the screening process is labelled as ‘mandatory’ by employers.

He said an individual’s financial background “should be private” and not affect his/her employment. He also questioned whether the practice is possibly “against the Personal Data Protection Act”. HRD finds out.

A spokesperson for the Monetary Authority of Singapore responded, calling the checks “entirely appropriate” and required “due diligence…to ensure their employees…who serve customers are fit and proper”.

“Financial soundness is one of the fit and proper criteria, along with honesty, integrity and reputation, as well as competency and capability,” the spokesperson wrote.

“Regulators in other jurisdictions such as the United Kingdom and Hong Kong apply similar criteria that include financial soundness.”

READ MORE: Westpac CEO Hartzer resigns amid money-laundering scandal

As for whether it’s legal under the PDPA, the MAS spokesperson said employers can only use or disclose the personal data “for appropriate purposes” with consent from the individual.

He added that conducting “due diligence” employment background checks, “is considered an appropriate purpose…where financial soundness is required”.

Discriminatory practice?|
Despite its legality and application globally, some professionals have long questioned whether it’s a form of discrimination.

“There’s a certain irony that the people who are most vulnerable and who most require access to jobs could be discriminated against because they have poor credit ratings,” one expert told HRD.

READ MORE: Money woes affecting employee engagement

However, others have stood by it, saying the common practice can flag “excessive indebtedness that may increase temptation to commit unethical acts”.

Another finance industry leader said the top two “red-flag warnings” in financial crimes are “where the individual was living beyond his or her financial means, or experiencing financial difficulties”.

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