As the dusts settles on the Senior Managers Regime which came into effect earlier this year, organisations within the financial services industry will no doubt be looking ahead to implementation of the PRA and FCA's new whistleblowing requirements. The deadline for implementation of these new requirements is 7 September 2016.
The new whistleblowing requirements (the "Rules") seek to 'encourage a culture in which individuals raise concerns and challenge poor practice and behaviour' within financial institutions. Below is a summary of some of the key requirements set out within the Rules:
- Internal whistleblowing arrangements – Relevant firms will be required to put in place internal whistleblowing arrangements so that the firm may address all types of disclosures from any persons (whether disclosures are received from employees or otherwise and whether disclosures relate to regulatory matters or otherwise).
- FCA and PRA whistleblowing services – Relevant firms will be required to inform UK-based employees about the FCA and the PRA whistleblowing services. Relevant firms may also require their appointed representatives and 'tied agents' to inform their UK-based employees about the FCA whistleblowing service. The FCA has confirmed that it believes it to be important that staff members are made aware that they are entitled by law to approach regulators should they wish to do so, irrespective of whether a concern has been raised internally.
- Annual Whistleblowing Report – Relevant firms will be required to prepare an annual report which is to be presented to the board (whilst the report will not be public, it should be made available to the FCA and/or PRA on request). The regulators have afforded some flexibility to relevant firms in respect of the report's content to allow firms 'to tailor [their report] as appropriate.'
- Losing a whistleblowing claim at the Employment Tribunal – Where a relevant firm loses an employment tribunal claim issued by a whistleblower, there will be an obligation for that entity to inform the FCA of the case, where the finding related to a claim that the whistleblower was victimised.
What can employers do in advance of the implementation of the Rules
We appreciate the considerable time spent and effort made by HR professionals, in-house lawyers and regulatory and compliance officers in respect of the implementation of the Senior Managers Regime earlier this year. In order to assist in the implementation of the Rules, we have set out some tips below:
(i) Review policies and procedures – What will perhaps be of most relevance to your organisation's policy review is the whistleblowing policy currently adopted. The whistleblowing policy should be updated to ensure that it does not conflict with the Rules and that the new obligations placed on organisations are addressed within the policy, as and when necessary.
In addition, all other policies which impact or overlap, such as grievance or disciplinary policies for example, should be reviewed for consistency.
(ii) Review precedent agreements – The Rules require relevant firms to include text within any new settlement agreements which explains workers' legal rights in respect of 'blowing the whistle'. A 'Settlement Agreement' is the term now used in Great Britain to reference 'Compromise Agreements', being the term still in place in Northern Ireland. While the Rules do not specifically refer to 'compromise agreements' for Northern Ireland explicitly, firms should nevertheless review any precedent compromise agreement, to ensure that it is compliant with the Rules.
Additionally, certain provisions which occasionally appear within settlement / compromise agreements in relation to protected disclosures will be prohibited under the Rules.
Provisions relating to protected disclosures which are set out in precedent contracts of employment should also be reviewed in advance of the Rules coming into effect.
(iii) Support your organisation's chosen 'whistleblowers' champion' – The Non-Executive Director who is appointed as your organisation's 'whistleblowers' champion' will have additional responsibilities to ensure that the whistleblowing arrangements in place within your organisation are effective, and are in accordance with the Rules.
In order to ensure that the appointed 'whistleblowers' champion' is able to carry out these responsibilities to the satisfaction of the Regulators, organisations should support the individual and provide training opportunities in this regard.
(iv) Consider providing training to staff – Given the obligations placed on organisations under the Rules, particularly around informing staff about their rights in respect of whistleblowing, organisations should consider providing training to staff which will address those obligations and provide employees with clarity on their rights relating to protected disclosures
We hope that the above will be of assistance to you in advance of the deadline of September 2016 for implementation of the Rules. If you would like any further information in respect of this article, or if we can assist you in reviewing your organisation's current policies and contractual documentation, please do not hesitate to contact us.