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There has been a major shake up in the financial world as new whistleblowing rules released by the FCA (Financial Conduct Authority) will require lenders and insurers to be assessed by industry watchdogs if they lose an employment law claim involving whistleblowing by the claimant. This move is intended to give confidence to whistleblowers’ concerns while helping to end the various scandals rampant in the financial sector, such as Barclays’ 2012 attempt to alter the Libor rate which resulted in £290m fine for the bank.
Under new FCA legislation companies within the financial sector will also soon need to appoint a “whistleblowing champion” to encourage employees to come forward with any concerns they have. As the UK’s official financial regulator, the FCA is able to make decisions of this kind without challenge.
The changes are due to begin in September 2016 and all businesses concerned will need to have arranged their whistleblowing policies in accordance with these new rules before that time. The new policies will apply to banks, building societies, deposit-takers and credit unions that have over £250m worth of assets. Insurers who are subject to the Solvency II directive will also be affected.
Since the recent announcement of these new plans there has been some speculation that the FCA would likely enforce a rule requiring employees to be paid for the whistleblowing information they reveal. This is a practice customary in the US where the Securities and Exchange Commission offers financial rewards for information that ultimately leads to a successful legal claim, which can sometimes make millions of dollars for the employee.
Annual whistleblowing report
In a joint announcement, both the FCA and the Bank of England’s Prudential Regulation Authority has said that the companies concerned will also need to draft a whistleblowing report to company boards at least once a year under the supervision of a senior manager official who will ultimately be responsible for overseeing that all whistleblowing arrangements are satisfactory.
Regulators have also made clear that employees must also be made to understand that they have a legal right to speak out regarding workplace concerns and be made aware of the rules handed own by the FCA whistleblowing service. Whistleblowers have traditionally played a significant role in revealing dishonest practice within UK firms. The changes are not intended to harm any financial organisations but are instead being put in place to “build on and formalise the good practice already widespread in the financial services industry”.
Whistleblowing Increase
These changes from the FCA come amid a period when whistleblowing claims have escalated across the financial sector. In 2014/15 alone there were a recorded 1,240 whistleblowing disclosures within the financial sector. This is a 28% increase over the 2013/14 results which recorded 1,040 claims, and an even more significant rise over 2007/08 when the Financial Services Authority received a mere 138 whistleblowing disclosures.
