Financial services and whistleblowing in the UK – Time to break the stigma – Whistleblower

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In 2002 Time’s Person of the Year was ‘The Whistleblowers’ with its cover featuring former Enron Vice Chairman Sherron Watkins1FBI Agent Coleen Rowley2 and WorldCom Vice President Cynthia Cooper3. These people were identified as “women of ordinary behavior but exceptional courage and sense”, for having denounced.

A CNN/Time poll at the time found that nearly six in ten Americans viewed whistleblowers as heroes. However, this poll also found that 57% believed whistleblowers faced negative consequences at work most of the time. Twenty years later, some may say that not much has changed and point out that financial services companies in particular still have a lot of work to do.

Whistleblowing in financial services

Although regulated by the Financial Conduct Authority (FCA), much of the regulation of financial services firms depends on self-regulation and self-reporting. We are all users of financial services companies, whether it is online banking, car financing or retirement. It is therefore essential that these companies operate in accordance with the rules set out by the FCA, in particular that the fair treatment of customers is always at the heart of their business model. Whistleblowers are therefore essential to ensure the effectiveness of self-regulation and self-reporting by financial services companies. However, experience tells us that financial services companies need to do more to empower – or, at the very least, protect – whistleblowers.

All organizations need to embed a culture of openness that starts with clear policies.

We frequently warn customers that a stigma continues to attach to those who report. The FCA’s investigation of Jes Staley, CEO of Barclays Bank from 2015 to 2021, sheds some light on how some within financial services continue to view whistleblowers.

In 2018, the UK’s FCA found that Mr Staley breached rules of conduct by seeking to unmask a whistleblower when he was CEO of Barclays Bank. Although Mr Staley was fined £642,000 by the FCA and forced to repay £500,000 in bonuses, the FCA did not find he lacked integrity, which would have ended his career. Furthermore, Barclays itself did not terminate Mr. Staley’s employment. Many at the time concluded that, in the first major test of the FCA’s approach to whistleblowing, it was unfair that a chief executive who tried to identify a whistleblower was allowed to keep his job.

Whistleblower champions

Last year, the FCA launched ‘With Confidence, With Confidence’, a campaign to encourage people working in financial services to report potential wrongdoing to the FCA. The FCA has also taken the initiative to “remind” companies that culture and governance remain key priorities for the FCA and that its whistleblower rules require companies to put in place effective arrangements for employees to report their misconduct. concerns.

An important rule requires companies to appoint a whistleblower champion to provide senior management oversight of the integrity, independence and effectiveness of corporate whistleblowers. However, rather than being a strong advocate for whistleblowers, too often that person is invisible to the wider organization and impossible to identify from the organization’s website. To help combat this, we suggested to the FCA that there should be a public and searchable register of whistleblower champions, that they should be properly resourced and have appropriate training.

What can organizations do to break the stigma?

Our experiences advising whistleblowers highlight that a view of whistleblowers as troublemakers persists within some financial services organizations.

All organizations must embed a culture of openness. It starts with clear policies (which aren’t buried in manuals), but also requires ongoing training at all levels of an organization so that managers listen when concerns are raised (and know how to escalate those concerns) and that all staff are encouraged to raise concerns without fear of reprisal.

One important rule requires companies to appoint a whistleblower champion to provide senior management oversight over the company’s whistleblower schemes.

These policies and training must also reflect the law, because too often we see companies seeking to redefine whistleblower laws. A prime example is whistleblowing policies that only recognize whistleblowing when an employee has reported through a specific channel. However, this does not reflect the law and therefore training for managers is essential to ensure that whistleblowers do not go unnoticed or, worse, employees risk retaliation for raising concerns.

How organizations handle whistleblowing issues is also key. Although some raise concerns anonymously, when the whistleblower comes forward they should be actively involved in any investigation (as long as they feel comfortable).

Ultimately, to conduct effective investigations, those investigating must work closely with those raising concerns to fully understand and resolve those issues.

It’s been 20 years since we celebrated the whistleblower. If we are to ensure accountability within financial services firms, we must once again celebrate the whistleblower.

Footnotes

1. Memos from Sherron Watkins warning company chairman Ken Lay of accounting irregularities were buried as Enron considered how to fire her.

2. FBI agent Coleen Rowley criticized the FBI for ignoring and mishandling information provided to her prior to the 9/11 terrorist attacks.

3. WorldCom Vice President Cynthia Cooper informed the company’s board of approximately $4 billion in accounting irregularities.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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