CoronavirusSep 21 2020

Now is the time to embrace the whistleblowers

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Now is the time to embrace the whistleblowers
REUTERS/Mal Langsdon/Files

An increasing number of employees are blowing the whistle as a direct result of the Covid-19 pandemic.

This means there is an immediate need for companies to ensure their whistleblowing policy and processes are still accessible to all employees and fit for purpose, in order to maintain good corporate governance, culture and risk management.

Protect, the UK’s whistleblowing charity, reported a 36 per cent rise in calls to its confidential advice line in May compared with the same period last year, with many of those calls relating to Covid-19.

Covid-19 may have diverted attention away from other less obvious issues, including changes to risk profiles

Unsurprisingly, employers’ immediate responses to the pandemic, including abuse of the furlough scheme and unsafe working environments, have dominated reports. 

Key Points

  • More employees are whistleblowing due to the pandemic
  • It is important to have a whistleblowing policy in place
  • Malpractice might be happening due to remote working

However, the risks go much further than this, with new working practices and the macroeconomic environment increasing the risk of everything from regulatory breaches to burnout, for example.  

Financial services companies have been operating in entirely uncharted waters and the initial focus has naturally been on operational challenges, such as those surrounding remote working and assessing the economic impact of Covid-19.

The risk is this may have diverted attention away from other less obvious issues, including changes to risk profiles, leaving cracks in risk management frameworks.  

There could also be a dilemma emerging, where employees have more reasons to blow the whistle, but at the same time, they do not feel safe speaking up.  

Companies should not underestimate the significance of developing risks and the importance of having an adequate whistleblowing process in place.

Every business should embrace the role that whistleblowing can play in effectively managing the risks that emerge in the coming months. Getting it right can help minimise detriment to the company, its employees, its consumers and the wider market.  

Conduct risk

The Financial Conduct Authority recently highlighted the risk that home working may facilitate misconduct.

Employees being ‘out of sight, out of mind’ makes it more difficult for managers to oversee how they are undertaking their role, who they are interacting with and how they are using data.

Gaps in oversight could also occur if employees lose their sense of responsibility and the opportunity to take behavioural cues from colleagues. At its worst, rogue employees may see home working arrangements as an opportunity to commit misconduct while going undetected. 

The economic and emotional impact of the crisis may also increase conduct risk.

Financial pressure or fear of redundancy may result in employees lacking judgment or becoming susceptible to committing fraud or bribery. Indeed, Action Fraud has reported a significant increase in fraud-related incidents since the outbreak of the coronavirus.   

Another danger of home working is that managers and employees become disconnected over time. Reduced interaction could result in managers making decisions based on hard data alone, without an appreciation of the wider context.

In turn, this may drive employee misconduct or make employees feel less comfortable challenging decisions or using the company’s whistleblowing channel. 

On the other hand, less oversight may mean some employees feel more empowered to report concerns away from their managers.       

Employment and pastoral care issues

There are also a number of employment and pastoral care issues to consider.

A heightened risk of redundancies may result in employees feeling reluctant to blow the whistle for fear they will be more likely to be considered for redundancy. Equally, they might tactically blow the whistle in an attempt to stall their departure or position themselves for a financial settlement. 

The extent to which home working has impacted mental wellbeing will differ greatly depending on personal circumstances.

However, less informal and daily interaction with managers might lead to wellbeing issues going unseen.  

As companies decide what working arrangements will look like in the future, discrimination allegations could emerge if businesses and managers do not adopt a transparent and consistent approach to flexible working.   

What companies should do

Companies should remind employees of the right to blow the whistle and the role this can play in the current climate. 

Refresher training and guidance, but also good culture and conduct, should highlight new risk areas and how they can be managed and mitigated.

Similarly, manager training should focus on employee engagement, wellbeing and encouraging an environment where it is safe to speak up.    

In light of changes to working arrangements, companies should ensure their whistleblowing arrangements are in a forum that can be accessed by all employees, no matter where they are physically located and what tools they are working with. 

Companies should take the opportunity to revisit their whistleblowing policies and procedures to ensure they account for changes to the risk profile.

Consideration should also be given to the impact remote working will have on the investigation process. It is possible that documents have been created outside the office and the company’s database, leading to challenges around document preservation and privilege.

As investigation teams become more dispersed, care should be taken to ensure there remains a robust audit trail recording steps taken and key decisions made.  

It is a challenging time for financial services as the industry grapples with the impact of a global pandemic and adapts to new ways of working.

However, whistleblowing can play a vital role in risk management and getting it right can help ensure companies are set up to succeed in the longer term.  

James Chadwick is partner and Chantal Peters is associate at UK law firm TLT