Advice on whistleblowing in the financial services sector
In this post-financial-crash climate, there are frequent headlines around whistleblowing in financial services, as wrongdoings in banks and financial institutions are unearthed through reviews and reports, and are then scrutinised by parliamentary committees as well as courts.
Previously, there was a stigma attached to the idea of whistleblowing, which resulted in great apprehension on behalf of the whistleblower as to whether they should sound the alarm on malpractice. However, the culture is now finally shifting, with the attitude towards whistleblowers being that they are necessary to provide much-needed checks and transparency within businesses.
New whistleblowing rules for organisations in the financial services
As a result of recent proposals, new whistleblowing rules apply to any firm that is one of the following:
- A deposit-taker (bank, building society, or credit union) with more than £250m in assets.
- A PRA-designated investment firm (Prudential Regulation Authority).
- An insurer subject to the Solvency II directive.
On 7th September 2016, new rules were introduced to encourage more staff to whistle-blow in financial service firms. Here are the most significant changes:
- Firms must appoint a Senior Manager as a Whistleblowers’ Champion.
- The Whistleblowers’ Champion must promote internal whistleblowing.
- The Whistleblowers’ Champion must oversee implementation of whistleblowing policies and procedures.
- The company must implement obligatory whistleblowing training procedures.
In essence, the changes aim to help encourage individuals to raise concerns and to challenge the sort of poor practice that was demonstrated in the financial crisis of 2008 and onwards.
The whistleblowing procedure in financial services organisations
In the first instance, you should report the information or concern you have to your company’s designated Whistleblowers’ Champion, who will then advise you on what happens next and what you should do.
If you feel unable to approach your Champion, you can contact the Financial Conduct Authority (FCA) directly, or you can also approach a prescribed person.
Under the new rules, any settlement agreement you come to with your employer should include a section which confirms that you are not prevented from making a protected disclosure to the public.
If the company you work for is outside the parameters of the new rules…
Unfortunately, the new rules will have the status of simply being non-guidance, and therefore compliance by a firm outside of the rules will be completely voluntary. However, the FCA and PRA guidance will continue to encourage all firms to adopt procedures and best practice regarding whistleblowing.
Financial-services whistleblowing case studies
Case study 1: former FOREX trader at Lloyds Banking Group
A recent example of a person who successfully claimed unfair dismissal as a result of whistleblowing involved Paul Carlier, a former foreign-exchange trader at Lloyds Banking Group.
Mr Carlier had raised concerns about Lloyds and in particular a currency trade deal for the supermarket Tesco, and was dismissed as a result. He was successful in his unfair dismissal action, because he demonstrated that Lloyds’ actions were unlawful.
Case study 2: whistleblowing non-compliance at the top echelon
In April 2017, headlines involving Barclays CEO Jes Staley proved that understanding and implementing whistleblowing procedures, even in one of the world’s largest and most sophisticated financial services institutions, still has a long way to go.
In this case, Mr Staley had admitted to attempting to find out the identity of the author of a whistleblowing letter, explaining his actions by saying that he honestly, but mistakenly, believed that it was permissible to identify the author of the letter.
How we can help you with the whistleblowing process
With specialist understanding of the financial services sector, our solicitors know the issues and are ready to assist with following:
- Advice and support before and during approaching the appointed Whistleblowers’ Champion and / or prescribed person.
- Advising whistleblowers on their rights and legal protection.
- Settlement agreements.
- Representation in an unfair dismissal claim.
- Seeking redress if you are mistreated as a result of whistleblowing.
- Helping your organisation comply with the new whistleblowing regime.
- Offering advice or training managers on how to deal with issues that may arise as a result of whistleblowing.
- Advising employers and employees on procedures relating to whistleblowing.
At Kennedys, we have expertise in assisting clients against financial institutions, and our Banking team is at the forefront providing expert commentary for the national press on conduct and culture in financial services.
Applying our specialist understanding of the financial services sector, our Employment and Banking and Finance teams will work closely together to ensure that complaints and procedures are accurately and smoothly adhered to.
Contact our team for whistleblowing advice and support
If you seek advice on any of the above issues, contact us by phone (0161 660 7520) or submit your details by email to email@example.com, or fill out the contact form opposite.