UK: Financial Conduct Authority And Prudential Regulation Authority Consultation Paper On Whistleblowing

Last Updated: 3 March 2015
Article by Nick Elwell-Sutton

On 23 February 2015 the Financial Conduct Authority ("FCA") and Prudential Regulation Authority ("PRA") issued a consultation paper ("CP") seeking views on proposed significant changes to regulated firms' whistleblowing procedures. If implemented, the proposals in the CP will form part of the PRA Rulebook and FCA Handbook and oblige regulated firms to comply with formal requirements in relation to whistleblowing.

Whilst some firms will already largely comply as a matter of good practice, for many it will require both a significant cultural shift and material changes in how whistleblowing issues are dealt with. Almost all firms will need to make some changes to comply.

Why is this happening?

In response to a report by The Parliamentary Commission on Banking Standards ("PCBA"), the FCA's and the PRA's proposals are aimed at ensuring that:

  • Firms formalise whistleblowing procedures; and
  • All employees are encouraged to blow the whistle where they suspect misconduct and that they can do so confident that their concerns will be considered and that there will be no personal repercussions.

Who will it apply to?

Insurers (including Lloyd's managing agents and third country branches) and PRA designated investment firms – typically UK banks, building societies and credit unions.

What are the proposals?

In summary, the proposals are that firms:

  • Inform their UK-based employees that they can blow the whistle to the FCA or the PRA and provide details on how to do so;
  • Put internal whistleblowing arrangements in place (if they are not already), and inform their UK-based employees about these arrangements;
  • Offer protections to all whistleblowers, whatever their relationship with the firm, and whatever the topic of their disclosure;
  • Include a passage in new employment contracts and settlement agreements clarifying that nothing in the agreement prevents an employee, or ex-employee, from making a protected disclosure; and
  • Appoint a "whistleblowers' champion" under the Senior Managers Regime/ Senior Insurance Managers Regime to an individual being a non-executive director or the Chairman.

At the core of these proposals are changes to the internal whistleblowing arrangements and procedures for firms. The CP suggests that measures should be taken so that firms:

  • Respect the confidentiality of people who raise concerns;
  • Be able to deal with disclosures from people who have not revealed their identity;
  • Assess and escalate concerns raised by whistleblowers within the firm as appropriate, and, where this is justified, to the FCA, the PRA or an appropriate law enforcement agency;
  • Track the outcome of whistleblowing reports;
  • Track what happens to an internal whistleblower to determine whether they are subsequently disadvantaged as a consequence of speaking out;
  • Provide feedback to whistleblowers, where appropriate;
  • Prepare written procedures (e.g. staff handbooks, etc.); and
  • Take all reasonable steps to ensure that no person under the firm's control engages in victimising whistleblowers, and take appropriate measures against those responsible for such victimisation.

In what would be a significant change to the way in which many firms currently operate, it is proposed that the whistleblowing process should in future be managed not by the HR function but by an internal audit or compliance function or contracted out to third parties although firms would still remain responsible to the regulators for such an arrangement.

Extension of disclosure regime

The existing framework providing legal protection to whistleblowers under the Public Interest Disclosure Act 1998 ("PIDA"), both in terms who it covers and what it covers, is already wide. However the FCA and PRA propose that firms' whistleblowing procedures should apply on an even more expansive basis. This will include the self-employed, agents, employees of subsidiaries, appointed representatives, customers and competitors and should extend to any allegation of wrongdoing, not just those covered by PIDA. In order to provide bite to protect those that fall outside the legal protection of PIDA, the CP states that any retaliatory treatment would be a matter of regulatory concern. The draft amendment to the handbook extends matters subject to whistleblowing disclosure to a breach of any regulatory rule, failure to comply with a firm's policies or procedures and the almost limitless concept of any behaviour that has or is likely to have an adverse effect on the firm's reputation or financial wellbeing.

Specific steps

The CP sets out a number of actions that firms will need to consider or implement to meet the proposed new requirements, although some aspects are being left until the consultation has closed before final decisions are made. These include:

  • Training for all UK based employees on the need to report wrongdoing, the steps to be taken and examples of matters that might give rise to a whistleblowing disclosure;
  • Training of managers on how to recognise whistleblowing, how to protect whistleblowers and ensure those accused of wrongdoing receive a fair hearing;
  • A mandatory requirement to include in both contracts of employment and settlement agreements an express provision telling employees that they are not prevented by any terms of the agreement from making a disclosure; and
  • Consider having contractual whistleblowing arrangements with tied agents and authorised representatives.

Whistleblowers' champion

It is proposed that an approved person being either a non-executive director or, preferably, the Chairman, is appointed under the Senior Managers Regime/Senior Insurance Managers Regime to have overall responsibility for:

  • Overseeing the effectiveness of internal whistleblowing arrangements, including arrangements for protecting whistleblowers against detrimental treatment;
  • Preparing an annual report to the board about their operation; and
  • Reporting to the FCA where, in a case before an employment tribunal contested by the firm, the tribunal finds in favour of a whistleblower.

The "champion" should be sufficiently senior and independent to be able to deal with the responsibilities arising from the role and should also have access to independent legal advice and dedicated training.

A duty to blow the whistle?

While the CP notes that the FCA and PRA's current view is that it would be undesirable to include a regulatory requirement on individuals to make whistleblowing disclosures, the PBCS report recommended that this should be the case. While that is not proposed, the CP does ask for firms' views on it and so it may be that the proposals change following consultation responses.

What firms need to do?

Many firms will already have in place procedures that cover much of what will be required by the CP. However some specific steps may still need to be taken to ensure full compliance:

  • Contracts of employment and settlements agreement will need to be updated to reflect the notification that employees are not prevented by the agreement from making whistleblowing disclosures. Employer's may wish to go further and include a positive contractual obligation on employees to raise wrongdoing;
  • Policies will need to ensure that they advise employees of the ability to whistleblow direct to the FCA/PRA and how to do so and to reflect the new framework more generally;
  • Consideration may be given to whether TOBAs and tied agent agreements may need to include whistleblowing arrangements;
  • Procedures will need to ensure that disclosures can be made confidentially;
  • Consider who should have internal operational responsibility for whistleblowing - in many case this may mean a move from HR to internal audit, compliance or a third party;
  • Implementing appropriate training across all UK employees and managers; and
  • The appointment of the whistleblowers' champion and setting out his or her remit, providing appropriate training and independent legal advice.

The cost benefit analysis appended to the CP notes the initial costs are expected to be upto Ł280,000 per annum for the largest firms and which is perhaps indicative of the seriousness with which the regulators are taking this and the scope of the steps that firms are expected to take.

The consultation is open for response until 22 May 2015 and the CP can be found here:


In common with most consultation papers, this may more accurately be described as advance notice of what is going to happen. Perhaps the most interesting aspect is around the concept of the "whistleblowers' champion" who will have a specific and accountable regulatory responsibility for the overall operation and effectiveness of a firm's whistleblowing procedures and a regulatory duty to ensure that those making disclosures are not mistreated as a consequence. This means that whistleblowing will, for many, now become a board level issue given the need to report both to the board on at least an annual basis and to the FCA where there is an adverse outcome in any tribunal litigation.

Inevitably those that whistleblow do so for a variety of reasons ranging from good reasons - such as a genuine desire to expose wrongdoing, to bad reasons - such as defensively to existing work related problems and to exert leverage in exit discussions. But whatever the reason it is clear that the regulators will fully expect firms to deal with the matter properly by having processes in place, recording what they do and monitoring and reporting outcomes at board level. The message for the future is very much "Don't shoot the messenger".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Nick Elwell-Sutton
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.