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Whistleblowing: Stringent PRA and FCA Voluntary Requirement Published

Posted on 25 January 2021

In December 2020, the PRA and FCA used their supervisory powers to impose a voluntary requirement on Tokio Marine Kiln Insurance Limited and Tokio Marine Kiln Syndicates Limited ("Tokio Marine"). This follows Tokio Marine's disclosure to the PRA and FCA about the outcome of the independent investigation into whistleblowing allegations that the firms commissioned.

In 2019, Tokio Marine became aware of a number of serious whistleblowing allegations and commissioned an independent investigation into those allegations. The investigation identified cultural issues and concerns about the effectiveness of Tokio Marine's whistleblowing systems and controls.

The PRA and FCA did not conduct their own investigations into the whistleblowing allegations and there is no formal finding of any breach of rules. Having regard to Tokio Marine's investigation, they considered Tokio Marine needed:

  • to improve awareness of how to recognise a possible whistleblowing disclosure.
  • to improve effective handling of such disclosures, including avoiding actual or perceived whistleblower detriment.

The PRA and FCA acknowledged that Tokio Marine was working to improve its whistleblowing systems and controls, recognising its commitment to do so. The actions set out in the voluntary requirement were designed to assess the effectiveness of the work undertaken by Tokio Marine. The structure of the VREQ was expressed to enable the regulators to:

  • Receive periodic information and assurance as to how the whistleblowing policies were operating in practice.
  • Identify any cultural or other barriers affecting the speak-up culture within Tokio Marine.
  • Understand how Tokio Marine proposed to assess any such barriers.

The voluntary requirement requires detailed reporting, and attestations, for three years. This includes confirmation of the number of whistleblowing reports received in a given year and a description of all training relating to whistleblowing delivered in the preceding year.

Comment

The regulators have made clear to the industry in recent years the importance they place on whistleblowing. Further, this is the third voluntary requirement concerning whistleblowing to be made public. In 2018, the PRA and FCA took action against the Barclays' CEO for a breach of whistleblowing rules, and as part of that case, the PRA and FCA agreed ongoing requirements with Barclays (as reported on in Enforcement Watch Issue 25: PRA and FCA Fine Barclays' CEO James Staley Over Handling Of Whistleblowing). In 2019, a similar voluntary requirement was reached with Society of Lloyds. It is clear that the regulators are taking the whistleblowing system seriously. Whilst not enforcement action, the fact that they used a VREQ here, fortified by attestations for 3 years, only goes to reinforce that seriousness.

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