The Financial Conduct Authority is under pressure from the Treasury Committee and a small business lobby group to explain how it plans to improve its treatment of financial services sector whistle-blowers.
Committee chairman Andrew Tyrie has written to FCA acting head Tracey McDermott asking for details on how the regulator plans to better safeguard those who raise the alarm on wrong-doing.
Mr Tyrie’s intervention follows concerns from not for profit business lobby organisation the SME Alliance, which has accused the FCA of betraying the confidence of whistleblowers, including the Alliance itself.
Back in January, the body wrote to Mr Tyrie expressing concerns the FCA had passed on sensitive information to the subject of whistleblowers’ complaints; the high street banks.
The following month, Mr Tyrie wrote to Ms McDermott for her response to these claims, also asking what progress that regulator had made towards implementing the Parliamentary Commission on Banking Standards’ recommendation that it encourage a “significant shift in cultural attitudes towards whistle-blowing”.
In March, she responded by confirming the FCA did not treat the SME Alliance as a whistle-blower and subsequently disclosed some of its information on individual customers with the banks accused of falsifying their records.
Her reasons for doing so rested on SME Alliance not having asked the FCA not to share its information with the bank.
A statement from Mr Tyrie’s office stated it was unclear from Ms McDermott’s letter whether the FCA raised the issue of confidentiality with SME Alliance when first approached, or clarified it would not be treated as a whistle-blower.
Commenting on the correspondence, Mr Tyrie said the regulator’s treatment of the SME Alliance suggested it may be neglecting the reasonable needs of whistle-blowers.
His 2013 Parliamentary Commission on Banking Standards took evidence on whistle-blowing, concluding the FCA “appeared to show little appreciation of the personal dilemmas that whistle-blowers may face”.
Tyrie, in his latest letter, said three years later the regulator appears still not to have grasped what’s needed to create an appropriate environment for them.
“I have written again for further assurances that the SME Alliance was treated reasonably,” he stated.
“The FCA’s rules and practices in this area need to be clear and well understood. This case presents the opportunity to provide that clarity. The committee expects a full answer.”
Last October, the regulator set out new rules designed to encourage a culture where individuals feel able to raise concerns and challenge poor practice and behaviour, due to come into effect from this September.
Research from law firm Pinsent Masons has published research revealed a 19 per cent reduction in the number of whistleblowing reports the FCA received over 2015, with 1,104 whistleblowing cases created last year, down by a fifth from the 1,367 in 2014.