Financial services rules broaden approach to whistleblowing


The new rules on encouraging staff to ‘blow the whistle’ in financial services firms are a significant development for whistleblowing in general. Firms must promote whistleblowing internally, and nominate a ‘whistleblowing champion’ by 7 March 2016 who will oversee the implementation of whistleblowing policies and procedures which must be in place by 7 September 2016.

The changes stem from proposals last October by the Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA). These bodies want to ensure firms formalise their arrangements for people who want to voice concerns about wrongdoing. Organisations affected by the new rules include banks, building societies and credit unions, PRA-designated investment firms, insurance and reinsurance firms.

The companies will have to inform UK-based staff about the new arrangements and their legal rights as a whistleblower. The whistleblowing policies will have to cover all types of disclosure, rather than limit these to the current categories covered under the Employment Rights Act 1996 (these are criminal offences, breach of legal obligations, miscarriages of justice, health and safety issues, damage to the environment and the deliberate concealing of any of these).

The changes will affect the drafting of employment contracts and settlement agreements. HR managers preparing these documents must ensure they do not include wording that discourages whistleblowing. Many workers are unaware that under current whistleblowing law they cannot sign away their legal right to report wrongdoing or that agreements that try to prevent them from doing this will be invalid. The legislation has not stopped some confidentiality clauses in employment contracts and settlement agreements seeking to deter workers from reporting concerns. Under the new rules these agreements will have to include a clear statement that the individual is not prevented from reporting wrongdoing under whistleblowing law, including to the FCA or the PRA.

To prepare for the new regime, financial services’ firms must appoint a senior manager, who is a non-executive directive, to have overall responsibility for the organisation’s whistleblowing policies and procedures and the protection of those using them. They will need to review existing policies and update them to ensure compliance.

Training may also be required as the range of concerns that will be reportable is much broader than under current whistleblowing law. Managers are likely to require specific training to recognise whistleblowing and protect whistleblowers. A firm’s fitness and propriety will certainly be called into question by the FCA where there is evidence of retaliation against a whistleblower.

With thanks to the CIPD for the information contained in this blog

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