The FCA and PRA have responded to public demand for greater banking accountability with new whistleblowing rules. These came into force on 7 September 2016 for banks, building societies, credit unions and some investment and insurance firms.

They are part of a range of new accountability measures including the Senior Managers Regime and changes to remuneration structures, conduct rules and market abuse protection. We look at the headlines and whether the rules will really change culture and what it means for the wider sector.

Headlines of the new Whistleblowing Regime

Whistleblowers' Champion

The Whistleblowers' Champion is to be identified, appointed, trained and resourced. This is a regulated, accountable Senior Manager and probably a non-executive director.

Updated whistleblowing policy and procedures

Much policy content is now regulated. Firms must devise and implement a new policy and procedures, which has to be backed up by detailed requirements for training and information, including for managers.

Annual Report

The Whistleblowers’ Champion must produce an annual whistle-blowers’ board report, also available to the regulator, and has personal responsibility for “ensuring and overseeing the integrity, independence and effectiveness” of whistleblowing policy and process.

Wider scope

This includes extending the policy to a wide range of workers and to ‘any concerns’ they may raise. This is much wider than before and wider than the scope of the Public Interest Disclosure Act 1998. It includes:

  • Regulatory breaches;
  • Breaches of the firm’s policies and procedures; and
  • Harm to the firm’s reputation or financial wellbeing.

Independent Hotline

An independent line of communication (akin to a hotline) must be provided to whistleblowers which includes the ability to raise anonymous and confidential disclosures.

Direct access to the regulators

Communicate clearly that workers are free to go directly to the regulator if they prefer. It is no longer possible to insist on internal disclosures first.

Victimisation protection

Communicate that the firm will offer protection from victimisation for those that come forward.

No more final settlements

Settlement agreements also need to repeat this right and are no longer able to require workers to warrant that they have not already gone to regulators or to confirm the points they have disclosed.


Any Tribunal whistleblower finding against firms must be reported to the regulators.

Update contracts

Employment contracts and templates for other procedures need to be updated.

Increased liability

There is increased liability for those that harm whistleblowers including to the fitness and propriety of individuals and firms responsible. Regulatory reporting obligations and protections will trump other agreements.

Regulatory whistleblowing service

The regulators have also improved their approach to dealing with those whistleblowers that come to them improving on what anonymity, dialogue, confidentiality and other protections they can offer. Firms are required to inform their workers about this service.

Will the new rules change banking culture?

Banking misdemeanours are never far from the news. New City Agenda reported that the 10 biggest misconduct scandals have cost Britain’s banks and building societies £53bn in fines and penalties since 2000. Although each of these have involved whistleblowers coming forward to reveal the issues, the identities and protection of the whistleblowers is hidden from view. It remains to be seen how far the new rules will help to catalyse the cultural change needed.

The intention behind the rules is to promote change to a culture that discourages and intercepts problems before formal compliance steps are needed.

Like other change management levers, too much negative reinforcement around liability and punishment can overlook the need to focus on positive change. Effective whistleblowing policies will dovetail with a culture in which speaking up and challenging misdemeanours is normal and encouraged.

Many firms are finding it easy to adapt. Others are finding cultural change a much longer process. Some will do no more than pay lip service to the rules and remain at risk. Some say that the rules and risk of further toxic scandals will help catalyse change. Others say that protection for those who come forward is still insufficient and the personal risks too great, and so unscrupulous banks will again try and game the regulations.

What does this mean for wider FS sector?

The new rules are in the handbook now and are already applicable to all 600,000 authorised firms on a non-binding basis. The regulators are starting consultation in 2016 on the details for extending these rules to all firms.

The Treasury has confirmed that it will be extended and set a target implementation date for early 2018. One of the aspects of the consultation will be proportionality on applying a regime across such a wide variety of firms.

There are concerns over an increase in bad faith whistleblowing for personal rather than public interests. Currently all political parties want to hold the financial and health services accountable and we can expect no let up for whistleblowing.

Although non-binding, the whistleblowing section of the handbook is now part of firms’ dialogue with both whistleblowers and regulators. For firms with past whistleblowing problems and dialogue with the regulator over implementing governance or policy improvements more widely, change now is something the regulator may expect.

The new rules are already having an effect on termination, settlements, investigations and disputes.

Many firms are already engaging with the future implementation of the SMCR (of which whistleblowing is a part) prior to it becoming mandatory.