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Sen. Warren Floats Bill to Stop Credit Checks by Employers

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Sen. Elizabeth Warren, D-Mass., introduced Wednesday the Equal Employment for All Act, legislation that would prohibit employers from requiring potential employees to disclose their credit history when applying for a job.

“A bad credit rating is far more often the result of unexpected medical costs, unemployment, economic downturns, or other bad breaks than it is a reflection on an individual’s character or abilities,” Warren said in introducing the bill. “Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs. This is about basic fairness — let people compete on the merits, not on whether they already have enough money to pay all their bills.”

Co-signers to the legislation include Sens. Ron Wyden, D-Ore.; Bob Menendez, D-N.J.; and Bernie Sanders, I-Vermont, who is running for president.

The bill has also been endorsed by more than 40 organizations.

Warren noted a study by the Federal Trade Commission earlier this year which suggested that errors in credit reports are common and, in many cases, have been difficult to correct. 

“It makes no sense to make it harder for people to get jobs because of a system of credit reporting that has no correlation with job performance and that can be riddled with inaccuracies,” Warren said.

Currently, broker-dealers are allowed to do credit checks on reps.

Brian Kovack, the co-founder and president of Kovack Securities in Fort Lauderdale, Florida, who was recently elected to represent midsize firms on the Financial Industry Regulatory Authority Board of Governors, said that he would fight for modifications to the reportable information that reps must disclose on their U4 registration form, which is available to investors on FINRA’s BrokerCheck database. For instance, there should be “de minimis exceptions” regarding disclosures of unsatisfied judgments and liens or agreements with creditors, he told ThinkAdvisor in a previous interview.

—Check out FINRA OKs Broad Expansion of Broker Background Checks on ThinkAdvisor.