New UK rules on the treatment of ‘whistle-blowers’ came into effect two days ago,on the seventh of September. For now they are only applicable to UK deposit-takers with assets of £250m or greater. They cover banks; building societies and credit unions; PRA (Prudential Regulatory Authourity) designated investment firms; Solvency II insurance and re-insurance businesses; the Society of Lloyd’s;and managing agents.
For all other firms regulated by the Financial Conduct Authority (FCA) the rules are of ‘non-binding guidance’ only.
Unlike the situation in the the US Securities Exchange Commission who can remunerate ‘whistle-blowers’, UK rules make no such provision.However the PRA provides for an employment tribunal to award unlimited compensation for those victimised for disclosing wrongdoing. These decisions will now have to be reported directly to the PRA.
In addition to the existing requirements that relevant entities assign responsibilities to a whistle-blowers’ champion to oversee the preparatory steps for the new regime, the new rules require ‘relevant entities’ to:
- implement internal whistle-blowing procedures allowing employees to raise concerns about wrongdoing and poor practice;
- present a ‘whistle-blowing report’ to the board on an annual basis; and
- ensure UK-based employees are aware of the regulators’ own whistle-blowing services as a separate means of raising concerns.T
Q: Is there now a ‘duty’ to blow the whistle?
A: No. The FCA has not placed an obligation on employees to blow the whistle.
Q: Do the rules apply to UK branches of ‘relevant entities’?
A: No. However, the FCA intends to launch a consultation on whether the same or similar rules should be extended to UK branches of overseas banks.
In due course, they are also expected to consider whether similar requirements should be imposed on a wider range of firms regulated by the FCA, such as stockbrokers, mortgage brokers, insurance brokers, investment firms and consumer credit firms.