Author: Syedur Rahman
8 April 2021
2 min read
Syedur Rahman of Rahman Ravelli considers the Financial Conduct Authority’s attempt to encourage would-be whistleblowers to report directly to it.
The Financial Conduct Authority (FCA) is trying to convince potential whistleblowers to report wrongdoing to it, rather than to their employers.
In a campaign, “In confidence, with confidence’’, that began last month, the FCA has emphasised its expertise in such matters, its confidentiality and the resources it is able to devote to investigating whistleblowers’ reports.
FCA Director of Enforcement and Market Oversight, Mark Steward, has stated the agency’s determination to act responsibly and listen to whistleblowers who “shine a light on serious misconduct’’.
The FCA’s campaign encourages individuals working in financial services to report potential wrongdoing to it instead of going through their employers’ internal reporting channels. The agency has produced literature about the campaign for firms to distribute to employees and will highlight it at FCA-hosted events.
The FCA has also produced a digital toolkit for industry bodies, consumer groups and other relevant organisations. It explains whistleblowing, when reports should be made to the FCA and how the agency ensures the person making the report is not identified. A confidential web form is being created to make it easier for whistleblowers to contact the FCA.
Whistleblowers that report to the FCA will have a dedicated case manager. They can meet with the FCA to discuss their concerns and can receive - if they wish to - regular updates throughout the course of the investigation that is initiated as a result of their report. The FCA has increased the resources and staff devoted to its whistleblowing team; which is trained to debrief and interact directly with whistleblowers and liaise with various departments across the agency.
The FCA requires firms to appoint a whistleblowers’ champion to ensure senior management are overseeing the integrity of whistleblowing arrangements.
In 2020, the FCA received 1,073 whistleblowing reports, compared with 1,179 in 2019 and 1,139 in 2019. Unlike the United States’ Securities and Exchange Commission (SEC), the FCA does not give financial rewards to whistleblowers.
This latest FCA initiative has been a long time coming but it does at least offer clarity regarding how whistleblowing should be managed. Yet it remains to be seen just how effective it can be without the use of any financial incentive to encourage whistleblowers to come forward. Whereas the FCA is relying on individuals to report wrongdoing because it is the right thing to do, the SEC is able to offer rewards to whistleblowers of between 10% and 30% of any penalty collected - as a result of their reports - that is more than $1 million.
The FCA’s campaign is an understandable response to the need to keep consumers and markets safe and enhance the effectiveness of whistleblowing. But it is hard to see how it will prompt an increase in whistleblowing reports being made to it, and the agency needs to go further than simply asking financial services firms to create a whistleblowing culture in their workplace.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.