UK: Freedom To Speak Out

Last Updated: 20 April 2017
Article by ICSA  

New rules for whistleblowing spell cultural change for all regulated firms

On 7 September 2016, the Financial Conduct Authority and the Prudential Regulation Authority announced new whistleblowing rules for banks, building societies, credit unions and some investment and insurance firms, in response to public demand for greater banking accountability.

The rules are part of a range of new accountability measures, including the Senior Managers and Certification Regime (SMCR), and changes to remuneration structures, conduct rules and market abuse protection.

The FCA wants to roll out the accountability measures across all regulated firms. On 7 March (the first anniversary of the SMCR) the regulator confirmed this roll-out will be implemented from next year, following a consultation during the second quarter of this year. The lessons to be learned from the banks and the question of proportionality as it applies across the sector are being reviewed.

The champion

Under the new regime, financial services companies must identify, appoint, train and resource a whistleblowers' champion. This will be a regulated and accountable 'senior manager' (under the regime) and probably a non-executive director. The champion will be tasked with personal responsibility for 'ensuring and overseeing the integrity, independence and effectiveness' of whistleblowing policy and process. The champion must also produce an annual whistleblowers' board report, which will be available to the FCA.

"A whistleblowers' champion will be identified, appointed, trained and resourced"

Firms must also devise and implement an updated whistleblowing policy and procedures. The regime also extends the scope of whistleblowing to a wider range of workers and to 'any concerns' they may raise. This includes breaches of regulations and breaches of the firm's policies and procedures, and harm to the firm's reputation or financial well-being.

The regime also requires the opening of an independent hotline of communication for whistleblowers, including the ability to raise anonymous and confidential disclosures.

There is also a requirement to communicate clearly that workers are free to go directly to the regulator if they prefer and that the firm will offer protection from victimisation for those who come forward. Settlement agreements also need to repeat this right and are no longer able to require workers to warrant that they have not already blown the whistle or to confirm the points they have disclosed. In addition, any tribunal whistleblower finding against firms must be reported to the regulators.

Employment contracts and templates for other procedures need updating under the new regime and there is increased liability for those who harm whistleblowers, and could call into question the fitness and propriety of any individuals and firms responsible for doing so (rule 18.3.9). Regulatory reporting obligations and protections will trump other agreements.

The regulators have also improved their approach to dealing with those whistleblowers who come to them, improving on the anonymity, dialogue, confidentiality and other protections it can offer. Firms are also required to inform workers about this service.

Effect on banking culture

It remains to be seen how far the new rules will help accelerate the cultural change needed. The rules are intended to promote change to a culture that discourages and intercepts problems before formal compliance steps are needed.

Like other change management levers, too much negative reinforcement around liability and punishment can overlook the need to focus on positive change. Effective whistleblowing policies will dovetail with a culture in which speaking up and challenging is normal and encouraged.

"Culture goes beyond compliance and can be a valuable differentiator for financial services firms"

Many firms are finding it easy to adapt. Others are finding cultural change a much longer process. Some will do no more than pay lip service to the rules and remain at risk. Some say the rules and the risk of further toxic scandals will help catalyse change. Others say that protection for those who come forward is still insufficient and the personal risks too great, and so bad banks will again 'game' the regulations.

Charles Russell Speechlys has produced a report entitled 'Cultural Risk within the Financial Services sector: Is the risk of breaching regulation driving better behaviour and is an increasingly risk-averse culture damaging entrepreneurial spirit?' This was written following a survey and panel debate hosted by the firm, chaired by the Wall Street Journal, and including the Institute of Business Ethics.

There were several key themes and takeaways from the event and survey. It was generally agreed that culture goes beyond compliance and can be a valuable differentiator for financial services firms. It was also agreed that good culture needs to address more than the codes, regulations, duties to customers, conduct rules and the administration of justice.

Values and good culture drivers should come from the top, and then become 'lived', part of the fundamental assumptions, beliefs and motivations of all in the firm – the tone from the top, the tune from the team. It should also be a natural part of a sustainable business model for firms to put the client at the heart of the business. Adopting a structure that encourages and rewards staff to serve the customer in line with the firm's culture is critical.

A significant proportion of participants said they believed regulation is stifling innovation and damaging entrepreneurial spirit within the sector. Fear has driven some firms to overcomplicate the compliance process which has led to a negative or less-than-ideal culture. Some firms need to simplify by working out their shared values, attitudes, standards and beliefs, and then align them across the firm's goals, strategies, structure and approaches to its people, customers, investors and the greater community.

Implications for financial services

The new rules are now in the handbook and are already applicable to all 600,000 authorised firms on a non-binding basis. The regulators are imminently starting consultation on the details for extending these rules to all firms, with a target implementation date of early 2018. One of the aspects of the consultation will be proportionality on applying a regime across such a wide variety of firms.

"A significant proportion of participants believe regulation is stifling innovation and damaging entrepreneurial spirit within the sector"

There are concerns over an increase in bad-faith whistleblowing for personal rather than public interests. Currently all political parties want to hold the financial and health services accountable and we can expect no let up for whistleblowing.

Although non-binding, the whistleblowing section of the handbook is now part of firms' dialogue with both whistleblowers and regulators. For firms with past whistleblowing problems, and dialogue with the regulator over implementing governance or policy improvements more widely, change now is something the regulator may expect.

Many firms are already engaging with the future implementation of the SMCR prior to it becoming mandatory. Most firms will consider matters now, make some adjustments, and plan for the introduction of a new full policy and training, and the appointment of the whistleblowing champion, soon after the regulations for all firms have been finalised and the 2018 deadline set.

The new rules are already having an effect on termination, settlements, investigations and disputes. New approaches to termination technique and settlement terms for whistleblowers are needed now. Firms are finding it increasingly hard not to use the handbook template wording for settlement agreements with the effect that employees are not being required to confirm that they have not gone to the FCA or that they have told the firm all they are worried about. Not only is the new template for agreements gaining traction for many firms already, the landscape of claims, reputation and regulatory risk has also changed.

Firms should tool up for whistleblowing investigations and must monitor the new self-certification and the referencing regimes which will also apply to all. Firms' deadline for first issuing certificates for individuals under the certification regime was 7 March. The final rules on this were due now, but are stuck in consultation on key points.

If, as seems likely, firms are required to keep records for six years, which will include investigations into any whistleblowing investigations into any authorised individual, how those investigations are handled and documented is relevant now.

It could directly affect the ability of authorised individuals to be certified, promoted or move firms. Whistleblowing investigations can often be complex, time-critical and labour-intensive. They can sometimes do considerable harm by themselves if mismanaged, regardless of the outcome. Training up on new skills will be needed, including how in-house or outside counsel can make use of privilege in their advice.

It is sensible to keep an eye on an increase in whistleblowing. The increased regulatory protection is available now. Some are going to see the new rules as a troublemakers' charter. Others will see the increased volume of concerns being raised as a sign of a positive culture so that issues can be resolved at an earlier stage. For regulatory investigations one eye needs to be on who did, or who should have, come forward with concerns raised to the regulator and how they were treated.

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.

In association with
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.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


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.