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Financial Conduct Authority review of banking whistleblowing arrangements
27th August 2019
What can other sectors learn from the Financial Conduct Authority’s recent review of banking whistleblowing arrangements?
In June 2013, the Parliamentary Commission on Banking Standards report (Changing Banking for Good) stated that the financial services sector must undergo a significant shift in cultural attitudes towards whistleblowing. In response, the FCA and PRA published new rules which became effective from September 2016 and by way of a follow up they recently reviewed the implementation of their 2016 whistleblowing rules across retail and wholesale banking.1
Their findings highlight the areas where financial services firms are still failing to meet the expectations set out. Whilst the FCAs Standards are specific to financial services organisations, in general they are a helpful cue for all organisations, regardless of sector, looking to get ahead of the curve.
What guidance can you take from these Rules?
The FCA formulated their Rules by looking at examples of good practice already found in the financial services sector; the key thing they took from this is the need to create a culture where individuals feel comfortable raising concerns without fear of retaliation.
Whether you need to completely overhaul your organisation’s culture, or more effectively communicate the openness already there, this is a significant task. There are a few key areas to focus on:
Policies and procedures
The FCA expects firms to ‘Have up-to-date written procedures, which are readily available to employees, outlining the firm’s approach to whistleblowing.’
Employees need to know which concerns should be raised through the Speak-up programme, how to go about it and what the next steps look like in terms of the investigation, their protection and actions taken by their employer. By setting these out clearly in an easy to access format the chances of people reporting concerns increase significantly.
The FCA’s recent review found that all firms had implemented or updated their existing policies and procedures. However, many firms were lacking clear guidance on the investigation process itself and how whistleblowers were protected from victimisation.
Examples of good practice here included a firm that monitored the employee record for 12 to 18 months after a report to ensure the whistleblower was not victimised.
In addition, all firms said they would report back to the whistleblower so there was transparency around the actions taken. Of course, in reality where a report has been made anonymously it may be hard to contact the individual.
Whistleblowers’ champion and annual whistleblowing report
The FCA expects firms to appoint a Whistleblowers’ Champion. ‘This individual has the responsibility for overseeing the annual whistleblowing report and the integrity, independence and effectiveness of the firm’s whistleblowing arrangements.’
The term Whistleblowers’ Champion has been adopted by the FCA, but regardless of the title the ethos that sits behind this role should be applied to a senior stakeholder in all businesses. This goes a long way to promoting the message to staff and other stakeholders that the culture is one that embraces those who speak-up. In addition the oversight by a senior stakeholder reduces the likelihood of processes being implemented then forgotten about.
The FCA review found that all firms had appointed an appropriately senior and independent Whistleblowers’ Champion. However, the annual reports were in some cases lacking in information and analysis. This was particularly noticeable in those firms with a lower volume of whistleblowing cases. Whether the low volume was due to employees not being convinced that the culture welcomed those raising concerns or not is hard to say but anecdotally, Safecall clients tend to see an increase in reports following an internal awareness campaign supported by senior management.
Examples of good practice here saw Whistleblowers’ Champions following up with whistleblowers’ to ascertain if they had faced any negative repercussions; commissioning a third party review of the process and issuing a survey to staff to ensure they understood the arrangements.
The FCA Rules set out the requirement for firms to ‘Provide appropriate training for UK-based employees, managers of UK-based employees wherever the manager is based, and employees responsible for operating the firms’ internal whistleblowing arrangements...’
The review found that most firms needed to improve the detail in their training to ensure employees understood the process of raising concerns and the firms’ efforts to maintain confidentiality and prevent retaliation
In addition, many firms did not distinguish between the training provided to all employees and the training given to managers and those operating the firms’ internal arrangements, including investigation teams.
There were some firms that delivered these standards well such as those that had introduced separate training for senior management and those involved in the assessment of cases.
The likelihood is that as a minimum guidance around good practice regarding raising concerns and challenging poor behaviour without fear of retaliation will be rolled out across many sectors and to others regulation will be imposed, and the FCA Rules provide a thorough and easy to follow plan for all organisations.
More than that, by instilling these core values within your business you will be protecting employees, potential reputational damage, revenue and shareholder value.
Safecall, a leading provider of an ethics telephone hotline and online reporting system regularly supports clients through the creation and implementation of whistleblowing policies and training.