Duties will include appointing ‘champions’, keeping records, reporting to the board and training
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have recently published new rules to ensure a stronger whistleblowing culture within the financial services sector. The regulators have set out a framework of new obligations on banks and insurers to protect those who blow the whistle, over and above the existing rules under employment law.
Whistleblowing is already on the increase, particularly to the regulators themselves, but the aim is to encourage growing awareness within financial firms of internal whistleblowing mechanisms and to foster greater protection for whistleblowers. In addition, the regulators want to ensure accountability at the most senior level for the way the issue is handled and how those who blow the whistle are treated.
The rules will apply to UK deposit-taking firms (such as banks, building societies and credit unions) with £250m or more in assets, and to PRA-designated investment firms (such as the largest investment banks), insurance and reinsurance firms subject to the Solvency II directive, and Lloyd’s managing agents (insurance underwriters who manage a Lloyd’s syndicate). For other FCA regulated firms, the rules constitute non-binding guidance. Other financial firms not currently subject to the new regime should note that the FCA intends to consult on extending the rules to include UK branches of overseas bank, and in time may consider including other regulated firms, for example, stockbrokers, insurance brokers, and investment firms.
Although the new development will involve several functions within organisations, HR will have an important role to play in preparing for and operating the new regime. The key requirements are that from September 2016 firms must put in place appropriate arrangements to handle all types of whistleblowing disclosures from ‘all types of persons’. So HR should review its policies and procedures in relation to secondees, interns, volunteers, contractors and agency staff, to ensure they are covered by and aware of the whistleblowing procedure. The FCA recognises that sometimes concerns raised by staff may be better handled through grievance procedures: for example, even though a complaint about bullying and harassment may constitute whistleblowing, it may not automatically have to be handled under a whistleblowing procedure.
Firms’ arrangements must be able to handle cases where the whistleblower has requested confidentiality or made an anonymous report, and include reasonable measures to prevent whistleblowers’ victimisation.
Employers must inform UK-based employees about the FCA and PRA whistleblowing services, keep records of whistleblowing concerns raised and the outcome of investigations, and provide appropriate training for UK-based employees and their managers (including managers based abroad) and employees responsible for operating the whistleblowing procedure. Settlement agreements must explain that workers remain entitled to blow the whistle even after leaving and signing such an agreement. Firms must also present a whistleblowing report to the board at least annually and inform the FCA if they lose a tribunal whistleblowing claim.
The new Senior Managers and Certification Regimes coming into force in March 2016 will also encourage whistleblowing in the financial services sector. The regimes are designed to make senior managers accountable for any misconduct that falls within their areas of responsibility, and to hold individuals to appropriate standards of conduct. They are likely to make individuals take more steps to report concerns, in order to protect their own position.
By March 2016 firms must also appoint a non-executive director as their ‘whistleblowers’ champion’ who will be individually accountable to the regulators for any failings of whistleblowing procedures. From March to September 2016 the champions must oversee the implementation of appropriate whistleblowing procedures. Although their role is non-operational (in line with their non-executive director status) they will need to work closely with HR and receive regular updates on the transition to the new regime.
Andreas White is an employment partner at Kingsley Napley
For more employment law articles, visit HR-inform
