Financial Conduct Authority introduces new set of rules on whistleblowing

The Financial Conduct Authority has published new rules on whistleblowing

The Financial Conduct Authority has published new rules on whistleblowing

Alongside the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA) has published new rules in relation to whistleblowing. These changes follow recommendations in 2013 by the Parliamentary Commission on Banking Standards that banks put in place mechanisms designed to allow their employees to raise concerns internally (ie to ‘blow the whistle’) and that they appoint a senior person to take responsibility for the effectiveness of these arrangements.

Issuance of the new rules follow on from the publication of the FCA’s and PRA’s final rules on improving individual accountability in the UK banking sector on 7 July 2015.

Tracey McDermott, acting FCA chief executive, commented: “Whistleblowers play an important role in exposing poor practice in firms and, in the past few years, have contributed intelligence that has been crucial to action taken against firms and individuals. It’s 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’s absolutely vital that firms have in place adequate policies on dealing with whistleblowers and that a senior manager takes responsibility for overseeing these policies.”

McDermott added: “These rules are designed to build on and formalise examples of good practice already found in parts of the financial services industry. They aim to encourage a culture in which individuals working in the industry feel comfortable raising concerns and challenge poor practice and behaviour.”

Individuals working for financial institutions may be reluctant to speak out about wrongdoing for fear of suffering personally as a consequence. Mechanisms within firms to encourage people to voice concerns – by, for example, offering confidentiality to those speaking up – can provide comfort to whistleblowers. It is, however, important that individuals also have the confidence to approach their employers.

Challenging poor practice and behaviours

The new rules aim to encourage a culture wherein individuals feel able to raise concerns and challenge poor practice and behaviour. The rules on whistleblowing apply to deposit-takers (ie banks, building societies and credit unions) with over £250 million in assets and to insurers subject to the Solvency II Directive. They are non-binding guidance for all other firms supervised by the FCA.

The key rules on whistleblowing require a given firm to:

*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 on an annual basis

*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

In recent 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 increasing the resources dedicated to the area.

The FCA has seen an increase in the number of reports it receives. For example, there were 1,340 whistleblowing disclosures recorded for the financial year 2014-2015 against 1,040 in 2013-2014 (duly representing a 28% increase). In the financial year 2007-2008, the (then) Financial Services Authority received only 138.

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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