Last week the Fair and Effective Markets Review (FEMR) published a consultation paper on the fairness and effectiveness of the fixed income, foreign exchange and commodities (FICC) markets.  The paper acknowledges that public confidence and trust in the FICC markets has been seriously damaged following the high-profile scandals that continue to dominant the financial pages.  Whilst much has been done to prevent future manipulation of FICC benchmarks and regain public confidence, the control and regulation of financial markets is an ongoing process which must constantly evolve to meet new challenges.

In this regard, the paper seeks responses on a number of issues to improve the current regulatory regime, and some attention is given to how the industry could make whistleblowing regimes more effective.  The paper notes that whistleblowing has not always resulted in action being taken and the lack of certainty regarding the appropriate reporting mechanism and the level of protection that will be offered to whistleblowers has stunted its growth as a value tool for encouraging people to speak out.  Whilst the paper seeks responses on how the current situation can be improved, it does not suggest that any steps will be made towards an American-style system of incentivisation.  This is hardly surprising given that such an approach was flatly rejected by the FCA earlier this year.

Nonetheless, it seems that the UK authorities continue to look to the US authorities as demonstrated by the introduction in February this year of deferred prosecution agreements for organisations.  Introducing DPAs and looking again at whistleblowing are positive steps because they encourage financial organisations and those within them to self-police and change their cultures from the inside out.  However, there is still far too much uncertainty surrounding the consequences for organisations and individuals who self-report or whistleblow, meaning that they are less likely to do it.  A key problem with the UK's current regime is this fundamental lack of certainty, which the prosecutors remain ill-equipped to address. It is clear that these issues are still at the forefront of the regulators and prosecutors minds and it seems likely that further steps will be taken to address the current shortcomings in the UK's regulatory regime.