The FCA has today announced a consultation proposing a package of measures to formalise a firms' whistleblowing procedures.

Shane Gleghorn, head of Disputes and Investigations at Taylor Wessing comments on the consultation, which closes on 22nd May. He says:

"There is a particularly interesting development in this consultation report. It is proposed that firms appoint a "whistleblowers' champion", an individual with senior management responsibility for overseeing the effectiveness of internal whistleblowing arrangements and ensuring that appropriate protections are in place to prevent whistleblower retaliation. That individual will be required to prepare an annual report to the board, which could then be requested by the FCA or the PRA. The FCA is making it very clear that they are making anti-retaliation a responsibility of the board. This is a potential double whammy for the firm because, if the whistleblower is dealt with unfairly, he or she can avail themselves of the relief available in the employment tribunal and, on top of that, the firm will be the subject of critical regulatory scrutiny. This threat is underlined by the fact that the whistleblowers' champion will be required to report to the FCA where the firm contests an employment case and the tribunal finds in favour of the whistleblowing employee. So the decision making process is now not just the financial one of losing in the employment tribunal, but also the sobering thought that, if the firm makes a bad call on defending the proceedings, it will likely be the subject of regulatory criticism and, possibly, intervention."

Highlights of the consultation seeking views on the proposals include:

  • The new requirement that firms appoint a "whistleblowers' champion", an individual with senior management responsibility for overseeing the effectiveness of internal whistleblowing arrangements and ensuring that appropriate protections are in place to prevent whistleblower retaliation. That individual will be required to prepare an annual report to the board which could then be requested by the FCA or the PRA.
  • The proposal that the whistleblowers' champion will be required to report to the FCA where the firm in question contests an employment case brought by a whistleblower and the tribunal finds in favour of the whistleblowing employee. As stated in the consultation, if the FCA requires whistleblowers' champions to report all the cases the firm contested but lost, this would be "a new source of intelligence" for the FCA. Firms in such circumstances would, therefore, face not only criticism from the tribunal, but would be likely to face intervention by the regulator. 
  • The proposals will also require a new passage in new employment contracts and settlement agreements clarifying that nothing in the agreement prevents an employee or ex-employee from making a protected disclosure.

Please find below a link to the consultation:

http://www.fca.org.uk/news/cp15-04-whistleblowing-in-deposit-takers-pra-designated-investment-firms-and-insurers