Getting fit and proper for new financial services whistleblowing regime

Certain financial services firms must comply with new Bank of England’s Prudential Regulation Authority (PRA) rules designed to encourage staff to “blow the whistle”.

13 Jan 2016
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Employment E-alert

The Issue

Deposit-takers with assets greater than £250 million, PRA-designated investment firms and insurers (relevant firms) must have effective whistleblowing arrangements for staff to raise concerns either internally or to regulators about wrongdoing and to minimise retaliation against whistleblowers.

What must relevant firms do?

By 7 March 2016, relevant firms must nominate a “whistleblowing champion” who is both a Senior Manager, under the Senior Managers’ Regime, and a non-executive director to oversee the implementation of whistleblowing policies and procedures. The whistleblowing champion must also ensure that whistleblowers are protected from detrimental treatment and that an annual whistleblowing report is made to the board. The champion may delegate the day-to-day operation of the whistleblowing procedures.

By 7 September 2016, compliant whistleblowing policies and procedures must be in place.

The new rules:

  • Require relevant firms to inform their UK-based staff about whistleblowing arrangements and their legal rights as a whistleblower and to ensure that wording in employment contracts and settlement agreements does not discourage whistleblowing. Agreements that try to prevent workers reporting wrongdoing are prohibited and invalid
  • Require employment contracts and settlement agreements to include a clear statement that the worker is not prevented from reporting wrongdoing under whistleblowing rules, including to the Financial Conduct Authority (FCA) or the PRA
  • Restrict the use of warranties in agreements that confirm workers have not made a whistleblowing report and are unaware of any information which could lead them to do so
  • Encourage compliant whistleblowing policies to cover reporting all types of disclosure (i.e. not limited to reportable categories such as criminal offences etc.) and to broaden those who can report them to include the self-employed, non-executive directors, volunteers, agency workers, contractors, agents and suppliers.

Practical Guidance

A firm’s fitness and propriety will be called into question by the FCA where there is evidence of retaliation by a firm against a whistleblower. Early preparation is recommended.

To get ready for the new regime, relevant firms should:

  • Appoint a Senior Manager as their “champion” to have overall responsibility for the firm’s whistleblowing policies and the protection of those using them
  • Review and update existing whistleblowing policies, employment contracts and settlement agreements to ensure compliance with the new requirements
  • Arrange appropriate staff training. Managers will likely now require specific training to recognise whistleblowing under the new rules, to protect whistleblowers and to provide feedback effectively to those who have raised concerns or made disclosures. 


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