Financial Conduct Authority  

Regulator reveals number of tip offs about advisers

Regulator reveals number of tip offs about advisers

The number of people offering tip-offs about wrongdoing to the watchdog has declined for the second year in a row, despite the Financial Conduct Authority investing in training to improve the way staff handle whisteblowers. 

In today’s (5 July) 140-page FCA annual report and accounts it was revealed throughout 2016 to 2017 the regulator implemented a new case management system to improve handling of whistleblowing cases, and provide better analytics with outside organisations.

Yet the number of reports it received has continued to fall.

In 2016 to 2017 the FCA managed 900 intelligence cases from whistleblowers and shared information with external bodies, including the National Crime Agency, police forces, HM Revenue & Customs and other UK and overseas regulators, in more than 100 cases.

Of the 900 reports, 119 were red flags raised about financial advisers, around 13 per cent of the total.

In 2015 to 2016, the FCA received 1,014 tip-offs and in 2014 to 2015 the regulator managed 1,340 whistleblowing reports.

Last year the regulator also had support groups and charities speak at an internal whistleblowing event in May 2016 and the watchdog engaged with other bodies to benchmark their own approach to whistleblowing reinforced staff.

The FCA also spent more on training to ensure staff recognised when an offer of information from an individual was, in fact, whistleblowing and taught employees how to improve their approach to interviewing whistleblowers.

A spokesman for the FCA said: “We do not have a target for the numbers of whistleblowing cases we should receive.

“Our aim is to ensure that those who prefer to report to an independent body know about our role and that, if they take the often difficult step of reporting on a previous or current employer, we will treat them and their information sensitively and professionally.

“We have seen a decline in the number of whistleblowing cases for the second year in a row. We believe that whistleblowers are more aware of the reporting mechanisms in their firms, and so are reporting internally first.”

Erika Kelton, a partner at the US whistleblower law firm Phillps & Cohen, said it was no surprise that the number of whistleblowers who have filed reports with the Financial Conduct Authority has dropped over the past two years.

She said the program was not set up for success.

Ms Kelton said: “The FCA should be concerned about a precipitous fall in whistleblower reports over two years, particularly when compared to the overwhelming success of the whistleblower program at the US Securities and Exchange Commission.

“During the period when the FCA saw a dramatic drop in whistleblower reports, the number of SEC whistleblower tips increased from 3,620 in 2014 to 3,923 in 2015 and to 4,218 in 2016. Even more importantly, whistleblower information has led to the recovery of nearly $1bn (£774m) in disgorgement and fines from wrongdoers.

“There is a key difference between the FCA’s and the SEC’s whistleblower programs that explains why their results have diverged. Quite simply, the SEC’s program is so successful because whistleblowers are entitled to financial rewards when their information and assistance leads to a successful enforcement action that recovers more than $1m (£774,634).