Thursday 8 October 2015 4:14 am

As the FCA and PRA bring in new whistleblowing rules, will more people come forward in the City?

Matt Gingell is a specialist employment lawyer based in London. Matt advises businesses and employees on all employment law issues.

Matt Gingell is a specialist employment lawyer based in London. Matt advises businesses and employees on all employment law issues.

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The Financial Conduct Authority (FCA), alongside the Prudential Regulation Authority (PRA), has published new rules, encouraging more whistleblowing in big financial firms.

That’s good news – and should mean there’ll be greater awareness of whistleblowing. The burning question though is: will there be more disclosures?

In 2013 the Parliamentary commission on banking standards had raised concerns about employees not reporting wrongdoing.  In its report the commission indicated that the damage caused, for example, by the Libor-rigging scandal, might have been avoided had employees come forward earlier. These new rules have followed on from the recommendations in the report.

The rules, which come into force in September 2016, will require large banks, building societies and insurance firms to appoint a senior manager as a whistle blower champion; make arrangements to handle all types of disclosures from employees; inform employees that they have a legal right to blow the whistle; present a report on whistleblowing to the board annually; inform the FCA on losing an employment tribunal case with a whistleblower; let  UK-based employees know about the FCA and PRA whistleblowing service and ensure that their appointed representatives and tied agents tell their UK based employees about the FCA whistleblowing service

Despite all that, the FCA and PRA have decided that there’ll be no regulatory duty on staff to blow the whistle. Therefore, provided that employees don’t have a duty to disclose arising out of their employment, whether employees spill the beans will remain a matter for their own conscience.

The law does of course protect whistleblowers when their employer dismisses them or subjects them to any other detriment because they’ve made a protected disclosure.

The worker must reasonably believe that that one or more specific types of wrongdoing has taken place, is taking place or is likely to take place, and that the disclosure is in the public interest.

But when it comes down to it, many employees probably feel that there’s just too much risk in blowing the whistle.  The risk of retaliation, damage to job prospects and the costs of litigation can all put employees off.

What about rewards, U.S style? Well, the FCA and PRA have binned the idea of financial incentives for whistleblowers who report into them. They say there’s no real evidence that incentives would increase the number or quality of the disclosures that they receive. The government also believes that financial incentives should not form an integral part of the whistleblowing framework.

Let’s hope there’s a culture change.

Otherwise dangling a carrot, or more accurately cash, might prove necessary.