Anonymous whistleblowing reports made to the Financial Conduct Authority have “skyrocketed” in 2022 since workers returned to the office, but overall reports remain down significantly in the aftermath of the Covid-19 pandemic according to a new report.
A freedom of information request submitted to the FCA by German-based cash payment service Funanga has revealed that whistleblowing reports made by anonymous individuals have risen in 2022 compared to the same period in 2020 and 2021.
Funanga chief executive Jens Bader believes the increase shows a correlation between anonymous reporting and remote working.
In 2019, 28 per cent of all reports were submitted anonymously, this fell to 21 per cent in 2020 before increasing again in 2022.
On average, across 2021, 20 anonymous reports were submitted per month. To date in 2022 this figure has increased to 30 per month.
The last 36 months have been a petri-dish for increased money-laundering, financial scams, fraud, and other forms of non-compliance. Jens Bader, Funanga“Remote working may have had a positive effect on privacy, emboldening people to speak out about wrongdoing while working from home, without feeling the need to do so anonymously. Now that more people have returned to the office part-time or full-time, whistleblowers are once again seeking anonymity during the reporting process,” Bader said.
The FOI request also revealed that following a fall in whistleblowing reports made to the FCA during the pandemic - total reporting in 2021 was down 13 per cent compared to 2019.
It found that reports are starting to rise again in 2022 and are up 6 per cent compared to the same period last year.
The FCA has previously faced criticism for its handling of whistleblower reports.
One of the major criticisms was that warnings given about London Capital and Finance and Blackmore Bond ahead of their collapses were not heeded.
Although, the FCA has previously contested that it did not receive information on either case from “anyone who would be classed as a whistleblower under the Public Interest Disclosure Act”.
The FCA has also faced criticism over its lead time when handling cases.
The FOI by Funanga has revealed that of the 108 reports received in June 2021, only 5 had been resolved with significant action taken against the company six months later.
Bader said he is “not convinced” that people have enough faith in the regulator to choose to blow the whistle and report wrongdoing.
“Without more transparency, speed, and meaningful action, people may be discouraged from reporting wrongdoing,” he warned.
In March 2021, the FCA launched its "In confidence, with confidence" campaign, in a bid to hear whistleblowers out directly where they decide not to use internal company channels.
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”.
In Bader’s view, it is worrying that reporting has not spiked as a result of this initiative.
“The last 36 months have been a petri-dish for increased money-laundering, financial scams, fraud, and other forms of non-compliance.
"All logical analysis would conclude whistleblowing cases would spike [after the campaign], yet the opposite is true. Whistleblowers fell silent in the aftermath of Covid, even if the wrongdoing never went away,” Bader said.
He added: “I’m deeply sceptical that wrongdoing is in decline across the financial services sector. People and businesses have not changed. Instead, it shows the limitations of the FCA’s efforts to encourage whistleblowing.”
In comparison to the drop in cases reported to the FCA in 2020, research from whistleblowing charity Protect showed a 20 per cent increase in whistleblowing cases across the same year.
Responding to the FOI results, Protect chief executive Elizabeth Gardiner told FTAdviser: “It is disappointing to read of long delays.
"Further investment in the FCA's whistleblowing function may help restore confidence, if it ensures that the vital evidence provided by whistleblowers is examined thoroughly and in a reasonable time frame.”
Gardiner said whistleblowers provide the FCA with vital information to prevent economic crime and improve enforcement.
"In return they should expect timely and thorough investigations and prompt and regular feedback - this is vital for whistleblowers to have confidence in their regulator,” she said.
“Many cases are complex and may require a long period of time to investigate but we are aware that whistleblowers are rarely informed or provided with feedback on any part of this process. We would like to see this changed.”
Responding to Funanga's report, a spokesperson for the FCA highlighted that a whistleblowing case remains open until "all remedial steps have been taken" and noted that "this can take time as firms manage what is required".
The spokesperson continued: "Whistleblowing reports are a vital source of information for us, helping us to do our job and protect consumers and the FCA has received between 1,041 and 1,153 disclosures per year over the past five years.
“We are taking action to tackle financial crime, including money laundering, and since 2018 we have fined 13 firms a combined £667mn for inadequate anti-money laundering, anti-bribery and corruption controls, including the first criminal prosecution of a bank under the Money-Laundering Regulations and several further cases in train at the moment.”
jane.matthews@ft.com
