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 £280,000 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
Similar Articles
Relevancy Powered by MondaqAI
Brahams Dutt Badrick French LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Brahams Dutt Badrick French LLP
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions