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Screenshot of a breaking news alert e-mail from Q2 2017
The Financial Conduct Authority (FCA), alongside the Prudential Regulation Authority (PRA), has today published a set of new rules regarding whistleblowing.
These changes follow recommendations in 2013 by the Parliamentary Commission on Banking Standards (PCBS) that banks should implement mechanisms to allow their employees to raise concerns internally and that they appoint a senior person to take responsibility for the effectiveness of these arrangements.
The rules on whistleblowing, which take full effect in September 2016, will cover deposit-takers (banks, building societies, credit unions) with over £250 million ($378.7m) in assets, and to insurers subject to the Solvency II directive. For the rest of the firms regulated by the FCA and the PRA, the new rules are non-binding.
- appoint a Senior Manager as their whistleblowers’ champion;
- put in place internal whistleblowing arrangements able to handle all types of disclosure from all types of person;
- put text in settlement agreements explaining that workers have a legal right to blow the whistle;
- tell UK-based employees about the FCA and PRA whistleblowing services;
- present a report on whistleblowing to the board at least annually;
- inform the FCA if it loses an employment tribunal with a whistleblower;
- require its appointed representatives and tied agents to tell their UK-based employees about the FCA whistleblowing service.
Tracey McDermott, acting FCA chief executive, commented:
“Whistleblowers play an important role in exposing poor practice in firms and they have in the past few years contributed intelligence crucial to action taken against firms and individuals. It is in the interests of the industry and regulators alike that wrongdoing is identified and addressed promptly. For individuals to have the confidence to come forward, it is vital that firms have in place adequate policies on dealing with whistleblowers and that a senior manager takes responsibility for overseeing these policies.
“These rules are designed to build on and formalise examples of good practice already found in parts of the financial services industry and aim to encourage a culture in which individuals working in the industry feel comfortable raising concerns and challenge poor practice and behaviour.”
Over the past years, the FCA has taken a number of steps to encourage whistleblowers to come forward to the organisation, including conducting a detailed review of its whistleblowing procedures and beefing up the resources dedicated to the area. The FCA has registered an increase in the number of reports it receives; for instance, there were 1340 whistleblowing disclosures recorded for financial year 2014/15 against 1040 in 2013/14 (28% increase). In the financial year 2007/08 the then Financial Services Authority received only 138.
The announcement of the new whistleblower rules follows similar measures being introduced over the past years in the United States and Australia.
In May last year, the Commodity Futures Trading Commission (CFTC) made its first award to a whistleblower as part of the Commission’s Whistleblower Program created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Just several days ago, the CFTC said it will make its second whistleblower award of approximately $290,000. The sum will go to a whistleblower who has provided valuable information about violations of the Commodity Exchange Act (CEA).
Early in 2014, Australian Securities and Investments Commission has revised the processes in order to encourage whistleblowers.
To view the announcement from the FCA on the new rules, click here.