The FCA and PRA have announced a new regime for whistleblowing in financial institutions. The regime will start to be phased in from March 2016.

The new regulations will apply to UK deposit-takers with assets of £250 million or more, PRA-designated firms, and certain insurance and reinsurance firms. The FCA is considering whether the regulations should apply to other regulated firms such as investment firms, and until a decision is made the regulations will stand as non-binding guidance for those firms. The FCA and PRA will begin a consultation process on whether the regulations should also apply to UK branches of overseas banks. Whatever is decided, it is likely that the regulations will be seen as industry best practice and expected practice ñ even in respect of businesses to which they do not specifically apply.

The regulations contain a number of key provisions:

  • Firms will be required to present a whistleblowing report to the Board at least once a year. The report will not need to be made public, but will need to be made available to the PRA or FCA on request.
  • A senior individual, who is a non-executive director subject to the Senior Managers Regime or the Senior Insurance Managers Regime must be appointed as a ìwhistleblowers championî. They will have oversight of the firmís whistleblowing procedures and the preparation of the report, although need not be involved in the day-to-day operations of whistleblowing procedures.
  • Employees based in the UK must be informed about the existence of FCA and PRA whistleblowing procedures, and should be made aware that they can use these rather than the firmís internal whistleblowing services.
  • Internally, a system must be established so that all types of disclosure, and not just specific disclosures which give whistleblowers protection under UK employment law and those relating to regulatory matters, can be handled from all types of person.
  • Affected firms should consider whether specific training is required to make their whistleblowing arrangements more effective. Settlement agreements should not prevent protected disclosures from being made, and the regime will include a new prohibition against requiring an individual to confirm that they have not made a protected disclosure or they do not know of any information that could lead to them making a protected disclosure.
  • Finally, the FCA must be informed if an affected firm loses an employment tribunal case where the case concerns an allegation that a whitleblower was treated less favourably.

Importantly, although originally included in the proposals, the regime will not impose a regulatory duty on a firmís staff to whistleblow.

Affected companies will need to appoint a whistleblowersí champion by 7 March 2016. The regime comes into force on 7 September 2016. Firms should review standard documents such as employment contracts and settlement agreements to ensure that they comply with the new regulations, and should update policy documents such as staff handbooks with regard to the firmís and the FCA/PRAís whistleblowing services. Consideration should be given to how the whistleblowing report will be organised. Firms should consider whether existing whistleblowing arrangements comply with the new regulations, and should consider whether training is required for staff.