30 years: Credit & banking
In this video, Bill provides background on what whistleblowing is, the legal framework in place to protect whistleblowers, and finally, what infrastructure and procedures firms should establish with respect to whistleblowing.
In this video, Bill provides background on what whistleblowing is, the legal framework in place to protect whistleblowers, and finally, what infrastructure and procedures firms should establish with respect to whistleblowing.
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10 mins 10 secs
Whistleblowing impacts multiple stakeholders, from employees through to managers and CEOs of firms. The topic has had more attention from the FCA in recent years as they have sought to develop regulation to encourage whistleblowers to come forward. Within the financial sector, whistleblowing can take the form of non-financial misconduct e.g. staff reporting on management issues, or financial misconduct e.g. fraudulent activity. All firms should be aware of what they are required to do in relation to whistleblowing procedures.
Key learning objectives:
Understand what whistleblowing is
Learn about the international and national laws surrounding whistleblowing
Recognise what firms are required to do in relation to whistleblowing procedures
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Whistleblowing. In finance and in other industries, whistleblowing is a term used by regulators to refer to the disclosure of information about wrongdoing. The ‘whistleblower’ is a stakeholder within the organisation or firm, most commonly an employee. The stakeholder will have ‘reportable concerns’ about their regulated firm. These concerns can range from ‘Breach of legal or regulatory obligations’ to ‘Fraudulent or criminal activity’.
In December 2019, the EU signed a whistleblowing directive into law that aims to increase legal protection for whistleblowers and improve consistency across EU member states. As The UK is no longer a member of the EU, the directive is not legally binding for UK firms. However, it will put pressure on the UK government to ensure whistleblowers have protections that are equal to those provided by the EU.
In the UK, the principal legislation surrounding whistleblowing is the ‘Public Interest Disclosure Act’ 1998 (PIDA). The main aim of the legislation is to ensure whistleblowers have adequate protection in place to avoid dismissal or unfair treatment such as harassment or bullying. PIDA widens the definition of what constitutes a ‘worker’ in comparison to other employment legislation. Under PIDA, a worker can include a contractor, partnership, trainee, agency staff or members of a limited liability partnership. Crucially, under PIDA, the worker must believe their claim to be in the public interest.
In 2016, the FCA and the Prudential Regulation Authority (PRA) introduced whistleblowing rules via the Senior Managers Certification Regime (SMCR). The SMCR outlines enhanced rules that require banks, insurers and building societies to appoint a senior manager (a non-executive director is preferred), otherwise known as a ‘Whistleblower’s champion’. This person will be responsible for ensuring that the culture and policies within a firm encourage whistleblowers to report misconduct, as well as protect their anonymity. According to the FCA, the ‘whistleblower’s champion’ must also “submit an annual report on whistleblowing procedures to the firm’s governing body”.
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