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Whistleblowing moving up govt agenda despite FCA shortcomings

Whistleblowing moving up govt agenda despite FCA shortcomings

The Financial Conduct Authority’s response to whistleblowing has faced criticism in recent years.

One of the major criticisms was that warnings given about London Capital and Finance and Blackmore Bond ahead of their collapses were not heeded.

Last year, the FCA took steps to encourage whistleblowers to call out financial institutions for various acts of wrongdoing via the launch of its "In confidence, with confidence" campaign. However, recent data suggests that these measures have failed to produce the desired results.

Whistleblowing is a topic attracting attention beyond the financial services industry; the whistleblowing bill, which was introduced to the House of Commons on April 26 2022 by MP Mary Robinson, seeks to establish an independent Office of the Whistleblower to tackle the many issues facing whistleblowers.     

This article considers the level of success that the FCA has achieved so far in encouraging and protecting whistleblowers, the stumbling blocks that appear to be inhibiting substantive progress, and how whistleblowers may best navigate the risks of the current landscape.                      

The FCA launched its "In confidence, with confidence" campaign in March 2021, signifying a commitment by the FCA to hear whistleblowers out directly where they decide not to use internal company channels, perhaps out of fear of the consequences or distrust of the internal process.

A reporting individual has a dedicated case manager, is able to meet with the FCA to discuss any concerns and can receive optional regular updates throughout the investigation.

As part of the campaign, the FCA also produced a digital toolkit for “industry bodies, consumer groups and whistleblowing groups to encourage individuals to have confidence to step forward”.

The campaign was heavily endorsed by Mark Steward, executive director of FCA enforcement and market oversight, who stated: “We want all whistleblowers to feel welcomed by us and to feel safe because of us.”

Lacklustre results

More than a year on from the inception of the campaign, the FCA whistleblowing data is less than encouraging, suggesting that the campaign has not yet resulted in an increase in whistleblowing reports.

The FCA’s whistleblowing data from Q4 2021 showed that 279 new reports were received that quarter, roughly the same number as the previous quarter (289). 

There are several reasons why the FCA’s campaign may not be having the desired effect.

Firstly, the chance of a negative impact on employment following a whistleblowing report is high. In contrast to the figures from the FCA flat lining, whistleblowing charity Protect reported a 20 per cent increase in whistleblowing cases across 2020. 

Whistleblowers in many sectors theoretically receive protection. The Public Interest Disclosure Act 1998 incorporated the whistleblowing provisions into the Employment Rights Act 1996, with the intention of protecting whistleblowers and therefore encouraging them to flag wrongdoing or dangers such as risks to health and safety.