The Financial Conduct Authority released new rules Tuesday for the UK banking and insurance sector to protect whistleblowers and encourage them to come forward.
The FCA said the new rules will take full effect in September 2016.
The whistleblower rules apply to deposit-takers (banks, building societies, credit unions) with over £250 million ($382 million) in assets, and to regulated insurance companies.
For all other firms, the rules are “non-binding guidance,” the FCA said.
“These rules aim to encourage a culture where individuals feel able to raise concerns and challenge poor practice and behavior,” the FCA said.
The new rules require a firm to:
- Appoint a senior manager as their whistleblowers’ champion
- Put in place internal whistleblowing arrangements able to handle all types of disclosure from all types of person
- Put text in settlement agreements explaining that workers have a legal right to blow the whistle
- Tell UK-based employees about the FCA and PRA (Prudential Regulation Authority) whistleblowing services
- Present a report on whistleblowing to the board at least annually
- Inform the FCA if it loses an employment tribunal with a whistleblower
- Require its appointed representatives and tied agents to tell their UK-based employees about the FCA whistleblowing service
The FCA said it received 1,340 whistleblower complaints for financial year 2014/15, a 28 percent increase over the prior year and a ten-fold increase over 2007/08, when it received just 138 whistleblower complaints.
Tracey McDermott, acting FCA chief executive, said: “For individuals to have the confidence to come forward, it is vital that firms have in place adequate policies on dealing with whistleblowers and that a senior manager takes responsibility for overseeing these policies.”
“These rules are designed to build on and formalize examples of good practice already found in parts of the financial services industry,” she said.
The FCA’s new whistleblower rules are here.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.