Written by James Thomas on Monday March 14, 2016
Since the Financial Conduct Authority (FCA) replaced the Financial Services Authority there has been a short run, but dramatic, trend in the UK towards greater whistleblowing activity. 2014 saw 1,367 complaints reported to the FCA, an increase of 44% on 2013 and of 142% on 2012. However, in 2015 reported complaints declined by a fifth compared with 2014, according to law firm Pinsent Masons.
This may be a cause for some concern to the FCA, as whistleblowing provides a useful source of intelligence for the regulator. For example, in 2014, “73% of the whistleblowing cases reported to the FCA led to intelligence reports being opened”. Moreover, Pinsent Masons suggests that the decline in reports seen in the UK is apparently out of step with the trend witnessed in other jurisdictions, such as the US (where whistleblowing is incentivized), implying that it is probably not a reflection of a concurrent decline in allegations of misconduct.
Further, this reversal is notable because whistleblowing dovetails with the regulator’s broader ambitions of promoting cultural change within firms, through the creation of environments in which employees feel better able to raise concerns internally without fear of unsavoury consequences. Indeed, following the recommendations of the Parliamentary Commission on Banking Standards (PCBS), the UK’s regulators have made efforts to encourage more whistleblowing, for example through rules effective from September requiring banks, building societies and other firms regulated by the Prudential Regulation Authority (PRA)to have adequate whistleblowing policies and procedures, including the appointment of a Senior Manager as a “whistleblowers’ champion”. The question many are asking is whether these measures need to be supplemented with incentives for whistleblowers.
These latest figures suggest just how challenging the task facing the regulators may be. Indeed, as A spokesperson for ICA highlighted in this month’s issue of inCOMPLIANCE: “Powerful social forces are hardwired into the human brain by nearly 250,000 years of evolution [which] work strongly against speaking out against our peers or authority figures”. It remains to be seen whether regulators can achieve the transformation they are hoping for through current approaches – and there is of course no “quick fix” – but they will certainly be keen to arrest the decline observed in recent months.
To stay updated on the latest developments in governance,risk and compliance, anti money laundering and financial crime prevention, please follow us on either LinkedIn, Facebook and Twitter where you are guaranteed to be notified when our next blog post goes live!
Thank you. Your comment is awaiting moderation and should appear on the site shortly.
Required fields are not completed, please ensure all required fields (*) have been filled in properly.
You can leave the name empty should you wish to remain Anonymous.
Help and support
Alternatively contact us on: +44(0)121 362 7534 / email@example.com (Course information)
or +44(0)121 362 7533 / firstname.lastname@example.org (Enrolled learners)
or +44(0)121 362 7747 / email@example.com (Membership)
or +44 (0) 121 362 7503 / firstname.lastname@example.org (End Point Assessment)