Over the years, we have witnessed a marked increase in whistleblowing activity in the financial services sector. So much so that, back in 2013, the Financial Conduct Authority (FCA) stated that the amount of useful information received from whistleblowers had risen by nearly two thirds. An increase so substantial that it left the regulator having to rejig resources in order to cope.
Of course, whistleblowers are vital in uncovering wrongdoing and encouraging financial organisations, and those within them to self-police and improve culture from the inside out. And this is precisely why these individuals need to be protected and encouraged to come forward.
The FCA should pay particular attention to the passages of the report that deal with retaliation against whistleblowers. This ranges from bullying to dismissal – and everything in between. The consequences of retaliation risk are serious and cumulative – not just for the individual, but for whole industry sectors. If whistleblowers are too afraid to speak out, misconduct can flourish and become embedded in the corporate culture, making it increasingly difficult for employees to come forward or even recognise bad behaviour.
Whistleblower protection is poor: many organisations do not have anti-retaliation protections in place, so when faced with retaliation, the whistleblower is left to fend for themselves in an employment tribunal.
And even when successful, they too often feel that, after a lengthy and costly process, they failed to obtain an award which fairly compensates them.
While improvements in legislation and corporate culture are being pushed through, the regulators can play an active role in protecting whistleblowers. One option is to offer adequate financial compensation. The UK regulatory community may not find the US bounty regime, which has offered payouts of up to $14m (£9m), attractive but financial compensation that properly recognises the prejudice experienced seems only fair.
A second way could be for the regulators, rather than the whistleblower, to bring measures against employers who retaliate. Indeed, the US Securities and Exchange Commission (SEC) has adopted that approach, charging a hedge fund advisory firm with retaliating against a whistleblower. The firm agreed to pay $2.2m to settle.
Given the immense pressure in the UK to protect whistleblowers, we could well see the UK regulators looking for a test case to demonstrate that retaliatory conduct by employers will not go unpunished.