Summary: We provide 5 key tips for implementing the FCA & PRA's new whistleblowing requirements before the deadline on 7 September 2016.
The deadline of 7 September is fast approaching for the banks, insurers and PRA investment firms that are required to implement procedures to comply with the FCA and PRA’s new whistleblowing requirements. Our blog - New FCA & PRA rules published to encourage whistleblowing in banks and insurers - provides a summary of its key requirements.
We have collated our top 5 tips, to help you implement the new policies and procedures effectively:
- Conduct a thorough review of current policies and procedures against the new requirements.
We would advise a firm to carry out a comprehensive gap analysis of current policies and procedures as against the new FCA/PRA requirements. This may necessitate revisions to the firm’s whistleblowing policy, appointed representative/tied agent agreements, contracts of employment, settlement agreements, engagement letters and/or consultancy agreements. Firms may also have to liaise with external service providers (e.g. whistleblowing hotlines).
- Consider external whistleblowing resources and employee consultation prior to finalising new arrangements.
The FCA’s guidance provides that when considering whether a firm has complied with the requirement to establish effective whistleblowing arrangements, it will take into account whether the firm has: (i) drawn upon resources prepared by whistleblowing charities or other recognised standards setting organisations; and (ii) consulted with UK-based employees (or groups representing them). Firms should give careful consideration as to whether such steps should be taken prior to implementing new policies & procedures, as it may provide a useful defence if the measures are later called into question.
Firms need to consider the method, timing and frequency for providing tailored training to those that require it (i.e. UK-based staff, managers of UK-based staff and staff that man the firm’s whistleblowing service). The FCA’s rules provide some useful high level guidance on what the training should cover. If training is to be provided by an external provider then the firm will need to liaise closely with them to ensure the training is fit for purpose and ready in time for implementation.
- Provide adequate resource to the whistleblowers’ champion
Firms should already have appointed a NED to act as the whistleblowers’ champion (with responsibility for ensuring and overseeing the integrity, independence and effectiveness of the firm’s policies and procedures on whistleblowing). The whistleblowers’ champion’s role over the next few months is critical, as it is their responsibility to have oversight of the firm’s transition to its new arrangements for whistleblowing. The FCA and PRA have made it clear that they expect whistleblowers’ champion to have access to resources to enable them to carry out their role effectively (including access to independent legal advice and specialised training).
- Prepare for increasing numbers of whistleblowing investigations
It is perhaps inevitable that the implementation of new whistleblowing arrangements will lead to an increased number of disclosures that will require investigation. Whistleblowing investigations can often be complex, time-critical and labour intensive. Issues that may need to be considered include:
- preserving the evidence;
- identifying and reviewing relevant correspondence/documents;
- interviewing the whistleblower and other relevant individuals;
- privilege and confidentiality more generally (particularly in relation to the protection of the whistleblower);
- whether a report is required (with conclusions and/or recommendations); and
- considering whether any formal legal or regulatory notification is required.