Over the next week or so, HR Departments in financial services organisations across the country will be taking a last nervous look around their shops before the implementation on 7 September of new FCA/PRA regulations on whistleblowing in the workplace.
The new rules bring into full effect the preparatory steps mandated from March this year. These include the development of policies and procedures aimed at removing every possible obstacle to employees’ disclosure of wrongdoing within financial services organisations, and at the same time every possible hiding place for the senior management of any financial services organisation which is the subject of repeated disclosures. See our March blog for more details.
The highlights are re-summarised below. The regulations certainly do pretty much all that can be done structurally to encourage disclosures. Whether any rules can ever fully remove the inhibiting fear of insidious retaliation or damaged workforce relations which may accompany such disclosures is however a very separate question. Can financial compensation ever really make up for the loss of a lucrative career and prospects in a relatively small and tight-knit industry?
From 7 September, affected organisations will need in place:-
- a “Whistleblowing Champion”. Unfortunately I cannot shake the mental image of a mounted knight in shining armour, the initials WC fluttering proudly at the end of his lance, but this is actually entirely optional. All you really need is a non-executive Director with some suitable training, plus access to independent legal advice if he needs it. Note that this role is seen as sufficiently important that it counts as a Senior Manager Function (SMF or “smurf” in FCA-speak) under the FCA/PRA’s Senior Manager Regime.
- policies properly publicised to your staff which allow your Champion or his/her nominee to tell the difference between a protected disclosure and an ordinary grievance, and to treat them separately as a result;
- a process whereby disclosures are still investigated so far as practicable even in cases where the report is made anonymously or by someone who wishes not to be identified with it;
- a means of providing feedback to the whistleblower as the disclosure goes along, but remembering at all times that you owe duties of confidentiality also to any “accused”. The whistleblower has a right to know that he has not been ignored (this may also help limit external disclosures) but not to drive or dictate the outcome of the employer’s investigation;
- training for your line management both on recognising a disclosure when it is made and, even more importantly, on not reacting badly to it when it is. Unrelated to the new FCA/PRA rules, managers should now note that protected disclosures can also be made by agency workers as well as their own employees.
- tweaks to your template Settlement Agreement to make it clear that nothing in that Agreement prevents the employee from making a protected disclosure, and also to remove any previous warranty by the departing employee that he knows of no information which could form the basis of a protected disclosure;
- training for UK-based employees, to include express statements that the business takes the making of reportable concerns seriously, examples of what such a concern might be, how it can be disclosed and of what the corporate response might be, and details of sources of external support for an actual or potential whistleblower such as relevant charities and public interest groups. The required content of the staff and management training is clearly set out at SYSC.18.3.4-6 of the FCA Handbook.
But underneath it all, the key considerations around whistleblowing, even in the financial services sector, do not much change as a result of these new rules. Being a whistleblower only gives protection against victimisation for that reason. It does not help you against any of the other disappointments, reversals or irritations which working life will inevitably bowl you from time to time. An employer’s best defence to such a complaint is therefore evidence that whatever treatment the employee complains about took place on unrelated grounds. If you can break any perceived causative link between disclosure and treatment, whistleblowing complaints are less likely to be made and Tribunal claims are less likely to be brought (and certainly much less likely to succeed). That means less for your Whistleblowing Champion to include in his/her annual report to the Board, less he/she needs to mention to the FCA/PRA and less chance of the Employment Tribunal choosing to pass details of the alleged rule breaches to your regulator.