New rules on whistleblowing come into force

Posted on 27 September 2016


New FCA/PRA whistleblowing provisions came into force on 7 September 2016.  For some firms, they constitute rules and for others, they constitute guidance only.1 We refer to them in this article as "rules". These rules follow recommendations made by the PCBS in 2013. They have been hailed by some as key aspects of the new Senior Managers Regimes and of the regulators' wider mission to improve culture and conduct within financial institutions.

One of the stated aims of the new rules is to encourage a culture in which individuals working at every level in the industry feel comfortable raising concerns and challenging poor practice and behaviour. Provision and protection for whistleblowers has long formed part of the regulated industry's landscape, and many firms will already have had in place rigorous whistleblowing policies and procedures. However, the requirement to appoint a Senior Manager as the firm's 'whistleblowers’ champion', and the annual requirement to report to the board on this topic, will no doubt have refocused firms' attention.2

From an enforcement watcher's point of view, it is not difficult to see how enforcement action could arise for firms and for those appointed as 'whistleblowers' champion' from reports made as a result of a new reporting requirement under the rules. This is a requirement to report promptly to the FCA in all cases where a firm contests but loses an employment tribunal where the claimant based all or part of their claim on detriment suffered, or being unfairly dismissed, as a result of whistleblowing.3 Although a firm's 'whistleblowers’ champion' is not required to have a day-to-day operational role in handling disclosures, they may nevertheless be held to account when things go wrong. It will be interesting to see how the regulators react to such reports and whether enforcement action will follow against firms and 'whistleblowers' champions' in such cases.

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