The Financial Conduct Authority (FCA) just introduced a raft of new rules designed to make it easier for workers at financial institutions to “blow the whistle” on wrongdoing within the industry.
Among the new rules are the requirement for institutions to inform the FCA if they lose an employment tribunal involving a whistleblower, and the need for company boards to attend a yearly presentation on whistleblowing.
The rules are trying to prevent employees being afraid to report financial misconduct in firms. Lloyds worker Paul Carlier claimed that he was sacked by the bank for exposing improper trading practices.
The new rules bring UK regulation on whistleblowing into line with the Securities and Exchange Commission in the US, which already has formal regulations regarding useful information about financial misconduct. No rules regarding the payment of informants – as exist in the US – have been introduced.
Tracey McDermott, the acting chief executive of the FCA, said: “It is in the interests of the industry and regulators alike that wrongdoing is identified and addressed promptly. For individuals to have the confidence to come forward, it is vital that firms have in place adequate policies on dealing with whistleblowers”
Here are the key things that companies must now do:
- Firms must appoint a senior manager to be a “whistleblowers’ champion”.
- Institutions must put in place internal arrangements to deal with all forms of whistleblowing for all types of people.
- Contracts and settlement agreements for employees must contain text outlining that workers have a legal right to blow the whistle.
- Employers must tell UK based employees about the whistleblowing services provided by the FCA and PRA.
- At least once a year, a presentation about whistleblowing must be made to the company’s board.
- Firms must tell the FCA if they lose an employment tribunal with a whistleblower.
The rules, which have been created in conjunction with the Prudential Regulation Authority (PRA), come into effect in September 2016 and will apply to any firm that takes deposits and has assets in excess of £250 million.