Regulation  

Being a whistleblowing champion

    CPD
    Approx.30min
    Being a whistleblowing champion

    The past decade has not been a halcyon one for financial services.

    The collapse of Lehman Brothers and PPI misselling are two scandals which have contributed to one of the most turbulent periods in the industry’s history.

    It is not only the public and politicians who were aghast at these events. Those close to the FCA say the regulator was astonished at the lack of individuals raising concerns about these matters before they erupted into highly publicised scandals.

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    It would be churlish to suggest that these scandals could have been averted by individuals “blowing the whistle” – but had employees close to the heart of these matters had been able to provide the regulator with valuable intelligence, the effect of the scandals may well have been mitigated.

    It is to address exactly that problem the FCA has introduced the Senior Managers Regime, which takes effect on 7 September 2016. Every deposit taker (banks, building societies and credit unions) with £250m or more in assets must implement a raft of changes designed to encourage accountability.

    Insurance firms are also affected. In a comment lifted straight from the pages of Game of Thrones, the FCA said the new regime is not designed to achieve “heads on sticks”.

    That said, if processes are not implemented properly, the buck stops with the senior managers who have been appointed by the firms, with the 300-odd words each have agreed as their “Statement of Responsibilities” being the principles they will be held to if things go wrong.

    Even if the Senior Managers Regime does not directly apply to your firm, it indicates the good practice principles the FCA wants the financial services industry to live by.

    The FCA’s desire to reform and implement a culture shift is clear. The regulator wants to see the days of whistleblowers suffering personally for speaking out (whether through marginalisation, dismissal, or the tried and tested method of zero bonuses) – consigned to the same scrapheap as smoking in the workplace.

    It is on this basis the FCA requires firms to appoint a “whistleblowers’ champion” to ensure staff know they can raise their concerns internally or approach the regulators directly and not suffer as a consequence.

    What is whistleblowing?

    The types of disclosures that the FCA want whistleblowers’ champions to be concerned with are wide ranging.

    They will include concerns about breaches of regulatory rules, failures to comply with the firm’s policies or procedures, or any behaviour that harms or is likely to harm the firm’s reputation or financial wellbeing. This is actually a wider definition of “whistleblowing” than under the Public Interest Disclosure Act.

    Accordingly, the matters falling under a whistleblowers’ champion’s remit could range from a complaint from a senior colleague that a major pension fund lacks liquidity to meet its long-term liabilities, to a summer intern complaining that their lunch expenses have not been paid.