Market bulletin

Ref: Y4950

Title

Recruiting Staff – Protecting Confidentiality of Third Party Information

PurposeTo remind of the need to protect against receiving confidential third party
information when recruiting staffTypeEventFrom

Paul Brady, Head of Market Conduct
General Counsel & Risk Management

Date

18 December 2015

Deadline

Immediate

Related links

Lloyd’s has recently taken enforcement or other regulatory action against a number ofindividuals in the Lloyd’s market for having taken confidential information from theiremployer. In a number of instances, this has arisen where an individual has sought
employment elsewhere and has provided the information to the potential new employer or
has intended to use the information in their new role.
This bulletin provides the market with guidance to help minimise the risk that confidential
information may be improperly provided to a new or potential employer.
Arrangements to avoid improper disclosure of information
While the movement of staff is a normal part of the market, nevertheless all participants
have a legitimate right to expect that their confidential information will be respected and not
misused. In the first instance, that means employer firms must take suitable steps toprotect their own confidential information by putting in place appropriate legal safeguards,
security arrangements and training for their staff. Lloyd’s, however, wishes to ensure that
recruiting employers in the market also play their part.
Accordingly, Lloyd’s is asking that all recruiting employers should address the following aspart of their recruitment process:1

Ensure that where their staff are involved in recruiting new individuals to the firm thatthese staff members are made aware of the obligation to respect the confidential

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Lloyd’s is authorised under the Financial Services and Markets Act 2000

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information of the current or former employers of the applicants. At a minimum, it
should be made clear to staff, when recruiting new individuals, that they should not
solicit confidential information. In addition they should be asked to report any instanceswhere they come into possession of confidential information that they believe has been
improperly disclosed.
2At an early stage in the recruitment process the individual applying for the position
should be reminded of their obligation to respect the confidential information of theircurrent or former employer and that they should not seek to use or disclose any suchinformation in seeking employment from the recruiting firm. It should also be madeclear that misuse of confidential information may result in disciplinary action being
taken. Appendix 1 provides suggested text that can be used for this purpose. This
reminder should also be included in any offer letter made to the individual.

Improper disclosure of confidential information – enforcement action by Lloyd’s
Lloyd’s takes very seriously any improper disclosure of confidential information. Where
appropriate Lloyd’s will take disciplinary action against individuals who are found to havebreached confidentiality. Previous cases pursued have resulted in individuals facing
substantial fines (see Market Bulletin Y4750) or suspensions from the market (see Market
Bulletin Y4280).
Lloyd’s may also take disciplinary action against recruiting firms if they are found to have
improperly received confidential information or encouraged its disclosure. In deciding
whether to bring enforcement proceedings, the Market Supervision & Review Committee atLloyd’s, which is responsible for instituting enforcement actions, has indicated that it will
have regard to whether the recruiting firm followed the guidance set out in this bulletin.

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Appendix 1
Suggested text to be provided to individuals by recruiting employers during the recruitment
process:“In the course of your current or any previous employment it is likely that you haveobtained knowledge of or access to confidential information. That information may also
be commercially sensitive. It is important that you do not make use of that information
or disclose it to us as part of the application process unless you have permission to doso. If you have any questions in this regard please raise them with us before sharing
any information.
Lloyd’s has asked firms to emphasise that any misuse or wrongful disclosure ofconfidential information could result in enforcement action being taken.”

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