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Don’t shoot the messenger: whistleblowing in financial services

Recent press reports in relation to Barclays’ Chief Executive, Jes Staley’s, attempts to uncover the identity of an internal whistleblower have again brought the issue of whistleblowing protections within the financial services’ sector to the fore.

The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) introduced new rules on whistleblowing within financial services last year.  The new rules apply to UK deposit takers with assets of £250 million or greater, PRA designated investment firms and larger insurance and reinsurance firms and include requirements:

(i) to appoint a “Whistleblowing Champion”, expected to be a non-executive director, with responsibility for overseeing the relevant whistleblowing processes within that firm;

(ii) to put in place procedures for dealing with whistleblowing disclosures (which, in addition to protected disclosures as defined in the Employment Rights Act 1996, includes breaches of the firm’s policies and procedures and behaviour which could harm its reputation or financial well-being) made by any person, i.e. not just internal employees;

(iii) to ensure that the procedures protect confidentiality, provide flexibility in terms of the means of raising disclosures, allow for effective assessment and escalation and include requirements around appropriate record keeping;

(iv) to inform employees of the PRA and FCA’s own whistleblowing procedures and the fact they can go straight to the regulator with concerns should they wish to do so;

(v) for an annual whistleblowing report to be presented to the Board;

(vi) to report losses in the Employment Tribunal in relation to whistleblowing claims to the FCA; and

(vii) to make it clear in employee settlement agreements that the terms do not preclude the employee from raising subsequent protected disclosures.

In Mr Staley’s case, he is reportedly being investigated by the regulators after admitting to, in breach of the new rules, trying to identify an anonymous whistleblower who had raised allegations in relation to a long-term associate of Mr Staley who had joined Barclays.  Barclays have also said that Mr Staley will be issued with a formal written warning and will face a reduction to his bonus award.  However, in doing so, they appear to have arguably pulled their punches, which is somewhat at odds with their overriding obligation to encourage employees to raise concerns around poor practices.  Bearing this in mind, it will be very interesting to see whether the regulators now take more serious action, given the opportunity they have been presented to send a strong message to emphasise the importance of the new rules and to support the work being done to increase accountability within the sector more generally.

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