Is the Mutual Reference service compliant with the Data Protection Act?

Yes. We have legal opinion, and confirmation from the Data Protection Registrar, that the way data is handled and disclosed under the MRL referencing service is fully compliant with the above Act. If your own "know your client" and due diligence procedures do not provide for a Mutual Reference check, we will provide a consent form for your prospective clients to sign. If you are unsure please forward a copy of your standard application form/consent form and we will check this for you.As the service is also used to prevent fraud and money laundering, Mutual Reference checks are also compliant under the "prevention and detection of crime" exemption.

Is the data supplied by subscribers used for any other purpose?

No. The data itself belongs to the subscribers to the Mutual Reference service. Under our Terms and Conditions the data is licensed by you to Mutual Reference Limited and can only be used for the purpose of a Mutual Reference check between subscribers.

Am I disclosing confidential client information to competitors?

No. No-one has 'open access' to the database. Other users will only see your specific record if they have a matching entry.

What about suspicion of Money-Laundering?

Under the Money Laundering Regulations 1993, you are obliged to inform the authorities if you suspect an individual or an organisation may be involved in Money-Laundering activities. Once a report has been made to those authorities, you will not be permitted to disclose this information to any other party.

Could a flag in itself give rise to an action for defamation?

Our legal advice indicates that this is highly unlikely, as a defence of qualified privilege would be expected to be successful. This means that "..the communication is made for the protection or furtherance of an interest to persons who have a common or corresponding interest in receiving the same".

When should a client be flagged?

This is a matter for the individual subscriber. However, we suggest that the following scenarios may be appropriate:

i) The client defaults on payment of monies due to you.

ii) The client is known to have a conviction for fraud or theft or any criminal conviction, which you believe to be relevant to the securities industry as a whole.

iii) The client's account has unusual aspects that may or may not constitute grounds for rejection.

We do stipulate that each member must have their own documented criteria for flagging records, to ensure that a flag is reasonably objective. There is no requirement, however, for all members to use common flagging criteria.

If I have flagged a client and another member contacts me for further information, what can I legally divulge?

If another member of the Mutual Reference service contacts you regarding the details of a flag, you may say anything you believe to be true and accurate, and of relevance in assessing the individuals potential value as a client. Typically we would expect such conversations to take place between relevant compliance departments.

How secure is my data?

All users have their own unique identifiers so that only named individuals are able to access the service.

We have taken care that the systems used are of the highest security specification, Mutual Reference is aware of the constantly changing threats posed to internet-based services. We have an on-going policy of security development in- line with the latest advancements in technology and the threats posed.

Can using the Mutual Reference service help me with my legal obligations?

Yes. In addition to the information supplied by other brokers, the Mutual Reference data-base also contains constantly updated UK and US sanctions lists. Every check made on a new client will automatically include a check against these lists. In addition to this, there are also many other lists included from regulators and law enforcement agencies throughout the world.