Regulators in the United Kingdom said Wednesday they won’t adopt incentives for whistleblowers like those in the United States but will help businesses improve their internal reporting and whistleblower protections.
The Financial Conduct Authority (FCA) and the Bank of England Prudential Regulation Authority (PRA) said they welcomed the recommendations of the Parliamentary Committee on Banking Standards (PCBS) about whistleblowing.
The regulators agreed that strong measures are needed “to encourage and protect whistleblowers, who can play an important role in helping to protect the safety and soundness of firms and to prevent and detect wrongdoing,” the FCA said.
The regulators said research showed that introducing financial incentives for whistleblowers would be unlikely to increase the number or quality of the disclosures.
According to the research, incentives in the United States benefit only the small number whose information leads directly to successful enforcement action resulting in the imposition of fines and payments to whistleblowers. But the incentives do nothing for the vast majority of whistleblowers.
And the regulators said there’s no empirical evidence that incentives lead to increased, higher-quality whistleblower reporting.
The FCA and PRA said they embraced the PCBS’s recommendations that senior management in firms should have responsibility and personal accountability for ensuring there are effective whistleblowing mechanisms in their businesses, and for providing protection for whistleblowers.
To improve the process for whistleblowers, the FCA and PRA will begin publishing annual reports on the whistleblowing disclosures they receive and how they handle them to add greater transparency to their procedures, beginning this fall.
The regulators hope this will increase whistleblowers’ confidence in coming to the regulators when they feel they cannot report internally, or when they believe an internal report has been ignored.
The FCA/PRA report, “Financial Incentives for Whistleblowers,” is here.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.