New whistleblowing rules published by the FCA don’t go far enough, according to a City law firm.
According to Omar Qureshi, partner at CMS, the FCA may have to go further if it wants to emulate the success of its US counterpart, the SEC.
Earlier this month the FCA and the PRA published new rules on whistleblowing which take effect next year. These will require relevant firms to publicise reporting channels to staff, ensure their procedures for dealing with reports are adequate and appoint a senior whistleblowing “champion” who must produce an annual report to be available to the regulator.
Levels of reporting have increased 10-fold since 2007/08 but remain significantly below the levels of reporting in the US where three times as many reports were made to the SEC in 2013.
The CMS note said: “The exact role of the whistleblowers’ champion remains undefined and there appears little more by way of incentive for whistleblowers to come forward than there was prior to the rules being published.”
This month’s rules were introduced as a result of recommendations made by the Parliamentary Commission on Banking Standards in 2013.
Right to reply
A spokesman for the FCA said: “I’m not sure – given the difference in size between the two countries – that a comparison of the total number of whistleblowing reports in the US and UK is a fair one.
“Just last year, the PRA and FCA published work on whether to pay incentives to whistleblowers. We looked at the experience of the US and found there is as yet no empirical evidence of incentives leading to an increase in the number or quality of disclosures received by the regulators.
“It remains our view that financial incentives could create a number of moral and other hazards.”