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Insight

New rules on whistleblowing in the financial services sector – good practice for all?

12/10/2015
The financial regulators, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), recently announced new rules on whistleblowing designed to standardise good practice The financial regulators, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), recently announced new rules on whistleblowing designed to standardise good practice already found in parts of the financial services sector and to encourage a culture in which individuals feel comfortable raising concerns and challenging poor behaviour. The new rules have been in the pipeline for some time and are broadly supported across the financial services sector.

The rules will apply to deposit-takers (banks, building societies, credit unions) with over £250m in assets, as well as PRA designated investment firms (large investment banks) and insurers subject to the Solvency II directive. The rules are non-binding guidance for all other firms under FCA supervision.

Firms will be required to:

1.  appoint preferably a non-executive director as its whistleblowers' champion with responsibility for overseeing the integrity, independence and effectiveness of the firm's whistleblowing policies and procedures;

2.  establish appropriate and effective internal whistleblowing procedures and inform staff about these arrangements;

3.  provide training for managers responsible for operating the whistleblowing procedures;

4.  inform their staff about the whistleblowing services of the PRA and FCA;

5.  inform the FCA if they lose an Employment Tribunal claim with a whistleblower;

6.  present a report to the board on at least an annual basis;

7.  adopt wording in settlement agreements that does not deter staff from whistleblowing; and

8.  ensure that nothing in any employment contract or settlement agreement discourages whistleblowing.

The new rules will come into force on 7 September 2016 with the exception of the requirement to appoint a senior manager as a whistleblowers' champion which will apply from 7 March 2016.

As I commented to Personnel Today, the new rules combined with the changes to whistleblowing legislation in 2013 should hopefully lead to increased exposure of and discourage corporate malpractice.

The new rules also set a standard to which others are likely to follow, and so if your business is serious about encouraging an open and transparent culture (through greater management governance and ownership), you may also want to look at adopting some of these measures. Many businesses are now moving to align the different and developing strands of CSR under the banner of ethical leadership programmes to include: whistleblowing; modern slavery and human rights; data privacy; equality and inclusion; health and safety; bribery and corruption and environmental issues.

If you would like to discuss the new rules and how they impact your firm please do not hesitate to contact me or one of the team.

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