Relevant firms in the UK have until March 7, 2016 to appoint a “whistleblowers’ champion,” who then has until September 7, 2016 to oversee their firm’s readiness for the new whistleblowing regime.
The new whistleblowing regime: why make the change?
Since the 2013 Parliamentary Commission on Banking Standards recommendations were published in the UK, the Financial Conduct Authority (“FCA”) has been examining ways to ensure that individuals working in financial services feel able and encouraged to speak up when they have concerns to avoid the same financial scandals of the past.
At the same time as they are encouraging openness and challenge through whistleblowing, the FCA are imposing new requirements on individuals aimed at holding them accountable for their actions. This comes in the form of the Senior Managers (or Senior Investment Managers, as applicable) and Certification Regime, and Conduct Rules, each coming into effect March 7, 2016. Whatever level of responsibility an individual in a relevant firm holds, the new whistleblowing rules will be relevant to them.
We note that, despite some umming and aahing on the topic, there is no current sign of the FCA adopting the whistleblower bounty approach of the SEC; perhaps it heard that the SEC received the highest number of foreign tip-offs under the programme from the UK in Fiscal Year 2015!
Who is affected by this development?
The new rules will affect “relevant firms,” i.e. (i) UK deposit-takers with assets of £250m or greater (including banks, building societies and credit unions), (ii) Prudential Regulation Authority designated investment firms, and insurance and reinsurance firms within the scope of the Solvency II regime and to the Society of Lloyd’s and managing agents.
Whilst the initial rollout may be relatively small, however, the FCA has plans to consult with UK branches of overseas banks about these rules “soon,” and intends to consider in due course whether or not the rules would be effective and useful in other firms regulated by the FCA, including investments firms, stockbrokers, insurance and mortgage brokers, and consumer credit firms. Given comparative past experience in the UK, this expansion seems likely and will widen the catch considerably.
We’re not a relevant firm, do we need to do anything?
Take into consideration that the rules will still be non-binding guidance for other FCA regulated firms and notably they also state that firms not otherwise subject to them “may nonetheless wish to adopt the provisions…as best practice.” Gauntlet thrown down.
If you want to read more about our best practice guidance for relevant firms and other FCA regulated firms, and practical suggestions on how to get ready for this change, click here.