What are the main requirements of the Financial Conduct Authority (FCA) and Prudential Regulation Authority’s (PRA’s) new regulations on whistleblowing?In 2013, the Parliamentary Commission on Banking Standards recommended that banks put in place mechanisms to allow their employees to raise concerns internally and that they appoint a senior person to take responsibility for the effectiveness of these arrangements.

Therefore, in October 2015 the FCA and PRA released new rules on whistleblowing for financial institutions. One of these rules comes into force before the rest. By 7 March 2016, affected firms are required to have appointed a ‘whistleblower’s champion’ who will be responsible for overseeing the firm’s whistleblowing arrangements.

The rest of the rules take effect in September 2016 and require firms to:

• put in place internal whistleblowing arrangements able to handle all types of disclosure, from all types of person
• put text in settlement agreements explaining that workers have a legal right to blow the whistle
• tell UK-based employees about the FCA and PRA whistleblowing services
• present a report on whistleblowing to the board at least annually
• inform the FCA if it loses an employment tribunal with a whistleblower
• require its appointed representatives and tied agents (also known as company representatives) to tell their UK-based employees about the FCA whistleblowing service.

How do they vary from current whistleblowing rules?Historically, there were no mandatory regulations regarding whistleblowing for financial institutions to abide by. These new rules were designed to build on and formalise good practice already widespread in the financial services industry.

The anonymity question

Many whistleblowers are concerned about not giving their name for fear of suffering personally.

However, Public Concern at Work, the UK’s leading whistleblowing charity, notes there are risks involved with raising concerns anonymously, namely:

• being anonymous does not stop others from successfully guessing who raised the concern
• it is harder to investigate the concern if people are unable to ask follow-up questions
• it is easier to get protection under the UK Public Interest Disclosure Act (the UK law in place to protect whistleblowers) if the concerns are raised openly
• it can lead people to suspect that the whistleblower is perhaps raising the concern maliciously.

Therefore, Doodson advises people to raise concerns confidentially rather than anonymously. Reporting confidentially means giving your name on the condition that it is not revealed without your consent. Who will the new rules apply to?The FCA and PRA rules affect:
• UK deposit-takers with assets of £250m or greater (including banks, building societies and credit unions)
• PRA-designated investment firms
• insurance and reinsurance firms within the scope of Solvency II and to the Society of Lloyd’s and managing agents.

For all other firms regulated by the FCA and PRA, the rules will act as non-binding guidance.

The regulators plan to consult on applying the rules to UK branches of overseas banks in the future. Additionally, once the rules have been in place long enough for their effectiveness to be assessed, the FCA and PRA will consider whether similar requirements should be applied to other firms that they regulate, such as stockbrokers, mortgage brokers, insurance brokers, investment firms and consumer credit firms.

Will the rules mean that employees are legally obliged to blow the whistle if they observe wrongdoing?No. The FCA consulted on this issue before the rules were released and concluded that they would not impose a regulatory duty on staff to blow the whistle.

People often worry they might suffer personally as a result of blowing the whistle. How do the new rules address these concerns?
In my experience of speaking with workers, there are a myriad of reasons why people are worried about the repercussions of speaking up. Some common concerns include losing their job or being passed over for promotion and peer pressure to keep the status quo. There is also a belief that the situation is ‘none of my business’, or that even if they did speak up, nothing would be done to remedy it.
It is important to make the kind of disclosures that are protected under PIDA clear, so that people do not find themselves without the protection of the law These rules do go some way to addressing workers’ concerns, particularly by making it mandatory for firms to take all types of disclosure from all types of person. This means that firms should not dismiss concerns out of hand.

On the other hand, it is perhaps cause for concern that these rules have widened the scope of concerns that firms are expected to handle beyond the list defined and protected as ‘qualifying disclosures’ under the UK whistleblowing law, formally known as the Public Interest Disclosure Act 1998 (PIDA). I believe it is important to make the kind of disclosures that are protected under PIDA clear to employees, so that people do not find themselves without the protection of the law.

Qualifying disclosures include criminal offences, failure to comply with legal obligations, miscarriages of justice, threats to health and safety, damage to the environment and a deliberate attempt to cover up any of the above. Informing workers they have a legal right to blow the whistle, coupled with the increased knowledge about where to go to blow the whistle externally, should ensure that employees have more faith that they are able to raise concerns, and that they can go elsewhere if they don’t get any success within their firm.
About the expert


Rebecca Doodson is Manager of Integrity and Ethics at the Chartered Institute for Securities & Investment (CISI). She oversees the delivery of the Institute’s Integrity initiatives to members and supporter firms, with an aim to raise and uphold ethical standards in the financial services industry.

Previously, Doodson worked at the Association of Accounting Technicians (AAT) as Senior Conduct and Compliance Officer, with a particular focus on ethics and professional standards.

Doodson is a graduate of the University of York (BA Hons, History, 2008) and the University of the Arts London (PG Dip, Conservation, 2010). She is currently studying towards a Masters degree in Applied and Professional Ethics at the University of Leeds.
One of the new rules requires firms to appoint a ‘whistleblower’s champion’. How will this person be chosen and what will their role entail?The FCA and PRA guidance sets out that the whistleblower’s champion must be a senior manager within the firm, and preferably a non-executive director.

The whistleblower’s champion will be primarily an oversight role, and the rules state that the champion need not be open to direct approaches from employees. Therefore, it is most likely that whistleblowers will not approach their champion as a first port of call. It is more likely that the firm’s policy will encourage employees to approach their line manager, HR or Compliance department or call a whistleblowing hotline to raise concerns.

What are you doing at the CISI to help encourage a culture of disclosure at members’ firms?In September 2014, the CISI launched its Speak Up initiative, designed to give employees the tips, tools and confidence to raise concerns within their firms. The initiative includes a workshop and an online Professional Refresher CPD module.

The aim of Speak Up is to help employees identify how best to raise concerns, who to speak to, where to go if they are not listened to and to teach them what kind of protection they are entitled to under UK law. The second focus of Speak Up is to encourage employers and managers to ‘listen up’ – to acknowledge the effort it takes for an employee to raise concerns and to give feedback to the whistleblower, to take the concerns seriously and to act on them (where appropriate).

CISI members can access the Professional Refresher module via MyCISI and check the events calendar for Speak Up workshops in their area, or ask their local branch committee to organise a session.