The Prudential Regulation Authority (PRA) has published a consultation paper proposing amendments to PRA rules on whistleblowing for UK branches of banks and insurers. The proposed amendments would require UK branches to inform workers about the PRA’s and the Financial Conduct Authority’s whistleblowing services, and how to use them.
In its June 2013 final report, the Parliamentary Commission on Banking Standards (PCBS) recommended that banks put in place mechanisms to allow their employees to raise concerns of risk and wrongdoing internally (whistleblowing). The PCBS also recommended that banks assign responsibility for overseeing the effectiveness of these arrangements to a senior person.
In October 2015, the PRA introduced new rules requiring internal whistleblowing arrangements to be introduced by deposit-takers, PRA-designated investment firms, and Solvency II insurers. The current consultation paper proposes extending the rule requiring firms to inform their workers about the regulators’ whistleblowing services to UK branches of overseas firms. It also contains a proposal that UK subsidiaries of non-EEA banks (which will have established their own internal whistleblowing channels in response to last October’s rules) should make these available to workers at UK branches that are part of the wider group. The FCA has published a consultation with similar proposals. In publishing its own consultation paper, the PRA explains that it has worked with the FCA in creating these proposals and will continue to cooperate in drawing up the final rules and policy statement.
In summary, the policy proposals set out in the consultation paper require:
- UK branches of non-EEA banks and of both EEA and non-EEA insurers to inform their workers about the regulators’ whistleblowing services; and
- Any non-EEA banking group with both a UK branch and UK subsidiary which is subject to the regulators’ whistleblowing rules, to inform the staff of the branch of the subsidiary’s whistleblowing arrangements. This latter proposal does not apply to insurers.
The PRA explains that the proposals are made in the context of the current UK and EU regulatory framework, but that the PRA will keep the policy under review to assess whether any changes would be required, due to changes in the UK regulatory framework, including those arising once any new arrangements with the European Union take effect.
The PRA rules published in 2015 came into force in September 2016. The PRA expects the final rules consulted on in this consultation paper will come into force in September 2017.
The consultation closes on Monday 9 January 2017 and the PRA has invited feedback on the proposals set out in this consultation. A copy of the consultation paper can be found at:http://www.bankofengland.co.uk/pra/Documents/publications/cp/2016/cp3516.pdf.