UK: Regulatory Changes To Whistleblowing

Last Updated: 21 September 2015
Article by Nick Elwell-Sutton and Corinna Harris

I understand that, from early next year, the regulatory framework in relation to employees of regulated firms is set to change significantly, and that these changes include new whistleblowing rules. I have a number of questions about these regulatory changes and what impact they will have.

Because there is already protection in place for whistleblowers, why are the financial regulators getting involved now?

With the regular uncovering of serious wrongdoing by banks following the financial crisis, the Parliamentary Commission on Banking Standards wants to see an enhanced whistleblowing framework enforced by the FCA and PRA to raise standards of conduct. It will require certain regulated firms to formalise whistleblowing procedures and encourage the disclosure of suspected misconduct so that those blowing the whistle can do so confident that their concerns will be considered and that there will be no personal repercussions backed up by potential regulatory sanctions.

Who will it apply to and when will it come into force?

The proposals will 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. The implementation date is still to be confirmed but it is planned to come into effect from January 2016.

How does its scope differ from the current whistleblowing rules?

The existing framework providing legal protection to whistleblowers is already wide, both in terms of who and what it covers. 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 already covered under the existing framework. In order to provide an enhanced level of protection, the consultation proposes that retaliatory treatment by regulated firms could be a matter for regulatory enforcement.

The draft amendments to the FCA handbook extend 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".

While the extension to customers and competitors is no doubt well intentioned, it does run the real risk of disgruntled customers and competitors using this improperly and for personal advantage.

In future will employees be under a duty to disclose wrongdoing?

Possibly. Although the Parliamentary Commission on Banking Standards recommended this should be the case, the view of the FCA and PRA in their consultation papers was that this would be undesirable, but the point has been left open and the views of the industry sought in the consultation response. Of course it would be open to individual employers to require this as part of employees' contracts if they wished to do so and for senior employees it is already not uncommon to have a requirement that they should disclosure their own or other's wrongdoing. This already applies automatically to those who have fiduciary duties, such as directors, and can also apply to other senior managers.

So what are the specific proposals which firms will need to implement?

  • 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 the subject 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
  • Appoint a "Whistleblowers' Champion"
  • 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.

What is the Whistleblowers' Champion's role?

This is a new concept altogether and requires the appointment of a suitably senior and independent person (being a non-executive director or the Chairman) who is personally accountable under the Senior Managers Regime/Senior Insurance Managers Regime to have overall responsibility for overseeing the effectiveness of whistleblowing arrangements. Their duties will include ensuring there are 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 Whistleblowers' Champion is required to undertake specific training and, crucially, they must have access to legal advice independent of the firm.

Given the Champion will have individual accountability to the regulators, it is probable that we will see whistleblowing issues now being dealt with much more seriously at board level.

How much will it cost and what about the internal resources to deal with it?

The cost benefit analysis forming part of the consultation paper disclosed additional compliance costs of Ł280,000 per year for the largest firms and is indicative that firms will be expected to do more than pay lip service to this.

Interestingly, the consultation seeks to break a common link that raising issues of wrongdoing is to be automatically equated with an employee raising a grievance, and in order to dispel this it is suggested that internal operational responsibility for whistleblowing is moved from HR to internal audit, compliance or a third party.

First published on Thomson Reuters Accelus on 10 September 2015.

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 Mondaq.com.

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

Authors
Nick Elwell-Sutton
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (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 www.mondaq.com

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 Mondaq.com’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.

Disclaimer

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.

Registration

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 unsubscribe@mondaq.com 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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Security

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 webmaster@mondaq.com.

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 EditorialAdvisor@mondaq.com.

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 enquiries@mondaq.com.

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