UK: On My Whistle: Are You Ready To Meet The FCA/PRA's New Whistleblowing Requirements?

Last Updated: 3 December 2015
Article by Nicola Whiteley and Mandy Perry

Relevant firms have until 7 March 2016 to appoint a "whistleblowers' champion", who then has until 7 September 2016 to oversee their firm's readiness for the new whistleblowing regime: this much we know. But what will this mean for HR personnel in relevant firms and what best practice lessons can HR in other financial services organisations learn from these changes?

The new whistleblowing regime: an overview

Since the 2013 Parliamentary Commission on Banking Standards recommendations were published, the FCA has been examining ways to ensure that individuals working in financial services feel able and encouraged to speak up when they have concerns to avoid the same financial scandals of the past.

In working towards this aim, the FCA has developed a package of rules on whistleblowing "designed to build-on and formalise examples of good practice already found in the financial services industry". The policy statement and rules were announced last month, following a public consultation.

At the same time as they are encouraging openness and challenge through whistleblowing, the FCA are imposing new requirements on individuals aimed at holding them accountable for their actions. This comes in the form of the Senior Managers (or Senior Investment Managers, as applicable) and Certification Regime, and Conduct Rules, each coming into effect 7 March 2016. Whatever level of responsibility an individual in a relevant firm holds, the new whistleblowing rules will be relevant to them.

We note that, despite some umming and aahing on the topic, there is no current sign of the FCA adopting the whistleblower bounty approach of the US Securities and Exchange Commission ("SEC"); perhaps it heard that the SEC received the highest number of foreign tip-offs under the programme from the UK in Fiscal Year 2015!

The new rules will affect "relevant firms", i.e. (i) UK deposit-takers with assets of Ł250m or greater (including banks, building societies and credit unions), (ii) PRA-designated investment firms, and insurance and reinsurance firms within the scope of Solvency II and to the Society of Lloyd's and managing agents.

Whilst the initial rollout may be relatively small, however, the FCA has plans to consult with UK branches of overseas banks about these rules "soon", and intends to consider in due course whether or not the rules would be effective and useful in other firms regulated by the FCA, including investments firms, stockbrokers, insurance and mortgage brokers, and consumer credit firms. Given comparative past experience, this expansion seems likely and will widen the catch considerably.

In the meantime, the rules will still be non-binding guidance for other FCA regulated firms and notably they also state that firms not otherwise subject to them "may nonetheless wish to adopt the provisions...as best practice." Gauntlet thrown.

So, what does this mean for you?

Appointing a whistleblowers' champion

The first step is clear: appoint a whistleblowers' champion. Next, breathe a sigh of relief: you do not have to call that individual "the whistleblowers' champion", if you do not want to! With that burning question answered, how do you select the right person for the job? No jousting tournaments required: the champion should be a Non-Executive Director (NED) (although firms without NEDs will not be required to appoint one just to fulfil the role) and must be a senior manager or director who is subject to the Senior Managers Regime or Senior Insurance Managers Regime.

No doubt your champion will want to know if their days will be filled with concerned employees walking into their office and making disclosures. Whilst they would be expected not to turn away individuals who come to them, this is not the role that the FCA envisages. They should have oversight of the firm's activities and approach to whistleblowing and should take overarching responsibility for the regime and the firm's accountability to the regulator.

The FCA has reassured the industry that the task of a champion is commensurate with an NED position, and so it is clear that others within the firm will share responsibility for the day to day implementation of these requirements. It is likely that some of these responsibilities will fall to HR and/or to in-house employment counsel.

Implementing the whistleblowers' package of rules

The whistleblowers' champion and the firm have until 7 September 2016 to implement a package of reforms aimed at encouraging people to voice concerns.

  1. Certain language must be included in settlement agreements: The intention is to make clear that nothing in the settlement agreement is aimed at discouraging disclosures. Certain other language, such as warranting no knowledge of information that could become a protected disclosure, will be outlawed. HR should ensure that template agreements are updated and ensure that those who negotiate settlements are aware of this change.
  2. Firms should also consider whether to include similar positive language in employment agreements, and to require agencies to include the same in agreements with agency workers.

  3. There will be a requirement to notify the FCA if the firm is unsuccessful in an Employment Tribunal claim with a whistleblower: this responsibility is likely to sit with HR. We recommend you add a step in your case management system to remind you to contact the FCA in relevant cases. Teach your team about the requirement, and factor it in to decisions about settlement

  4. The firm must establish internal whistleblowing protocols and procedures capable of handling all types of disclosure from all types of person: The FCA's name for disclosures is "reportable concerns" and these are wider than a "protected disclosure" under the Public Interest and Disclosure Act. A reportable concern includes a protected disclosure, but is also extended to "a breach of the firm's policies and procedures" and "behaviour that harms or is likely to harm the reputation or financial well-being of the firm". As a result, your current set up may be insufficient, and you should be on the lookout for any type of disclosure that might meet this lower threshold.

  5. The FCA is aiming for a culture of challenge, and we recommend that the firm's current measures be audited and strengthened where required. It could help to design and roll out a training programme to ensure all managers, in particular, are aware of what might constitute a disclosure and how to escalate it. This means being able to respond to disclosures from anyone, not just employees.

    This doesn't mean investigating every one line gripe and groan, but it does mean having a mechanism in place to recognise a disclosure and deal with it appropriately. If HR won't be investigating these disclosures, consider sharing investigation best practice with colleagues.

  6. The firm must inform employees based in the UK about the FCA/PRA whistleblowing services: HR may well be involved in structuring communications and providing detail on the mechanisms available and follow up steps.

  7. The firm should require tied agents and appointed representatives to inform their employees about the FCA whistleblowing services: As above, HR may be well-placed to advise the whistleblowing champion on approach.

  8. An annual report to the Board is required: It is likely that the whistleblowers' champion will call on HR each year to contribute. Consider tracking relevant information and statistics to streamline the reporting process. This might include: details of training, updates made to policies and procedures, (anonymised) details of grievances, claims and disciplinary action.

You can always do more... 

As is so often the case, the FCA's reforms could lead to other developments that are within HR's remit, for example:

  • Disciplinary and grievance policies: Consider whether to update your firm's disciplinary policy to specify that disclosures which are deliberately false or maliciously made, will be subject to disciplinary action. You may also want to include reference to your whistleblowing practices in your grievance policy, so that an employee can make an informed decision about how to raise a concern.

  • Bullying and harassment policies: If it isn't already clear, consider updating your bullying and harassment policy to specify that the firm takes the detrimental treatment of whistleblowers seriously.

  • Maintaining confidentiality: The firm will want to offer whistleblowers as much confidentiality as possible. This may require emails and documents to be protected, and managers to be educated about the how and why.

  • Contacting the regulator: The FCA has stressed in its policy statement that it wants staff to know that they can approach the regulator, rather than making the disclosure internally. Consider whether to publicise or display the FCA's contact details in, for example, staff kitchens and/or on the intranet.

  • Cultural shift: Whistleblowing is on the rise. The FCA reports a 28% increase in disclosures it received in financial year 2014/2015 to 1340. (In 2007/2008, the FSA received only 138 disclosures). It's clear the FCA not only expects this to continue to increase, but that it requires firms to change their culture. HR can support this shift by having a positive message: encouraging employees to speak up, thanking employees that do, and following up on complaints of detriment.

So there you have it; now, on your marks, get set...

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
 
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.