Financial watchdogs announce new whistleblowing rules

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The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have published a package of new rules to make it easier for employees to raise concerns internally.

The move comes in the wake of the financial crisis, a series of financial scandals and the concerns raised by the Parliamentary Commission on Banking Standards. The commission called for better protection for whistleblowers to prevent excessive risk-taking and poor industry practice.

Banks and insurance companies will need to have the new measures up and running by September 2016.

Neil Johnston, director for employment and pensions at Fieldfisher, said the rules “aim to standardise good practice already found in parts of the financial services sector to encourage a culture in which individuals feel comfortable raising concerns and challenging poor behaviour”.

Under the new rules, banks will have to appoint a senior manager as their whistleblowers’ champion to encourage and support internal whistleblowers.

They will also need to put in place robust whistleblowing arrangements that are capable of handling all types of disclosure from all types of person.

“The new whistleblowers’ champion will have a critical role to play in ensuring the appropriate training and procedures on whistleblowing are in place to comply with the new rules and in the preparation of reports to the board on the operation and effectiveness of the firm’s systems and controls in relation to whistleblowing,” said Johnston.

“The early years of whistleblowing legislation were more generally categorised by self-interest disclosures in individual employment disputes rather than exposing corporate malpractice. Amendments to the whistleblowing legislation in 2013, combined with these new rules, should hopefully lead to increased exposure of corporate malpractice.”

A report on whistleblowing must be presented to company boards annually and they must inform all UK-based employees about the whistleblowing services provided by the FCA and PRA.

Tracey McDermott, acting FCA chief executive, commented: “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.”

The FCA must be notified if a bank or company loses a whistleblowing employment tribunal claim. The rules also require firms to put text in settlement agreements explaining an employee’s right to whistleblow.

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