The FCA’s new initiatives to improve its whistleblowing function.

Introduction

Early this month, the Financial Conduct Authority (“FCA”) published its findings of a qualitative survey of whistleblowers conducted in January 2022. This article summarises those findings and the FCA’s response; and discusses some of the key issues.

The survey

The FCA selected a sample of 68 whistleblowers who had engaged with different FCA Whistleblowing team members to take part in the survey. The whistleblowers had all made a report to the FCA in 2021-2022 and had interactions with different members of the team.

Full details of the survey have been published by the FCA. Some of the findings include:

• The data showed a concerning level of dissatisfaction in relation to the FCA Whistleblowing team including listening and exploring the issues reported. The FCA concluded that ‘whistleblowers did not feel heard when they first reported to the FCA’.
• Whistleblowers did not feel there was enough dialogue to enable a proper investigation of the concerns. 
• A substantial amount of respondents to the survey were frustrated about the lack of updates. They did not feel reassured by the team of progress and perceived delays and inaction.
• Most felt the final outcome did not meet expectations. They told the FCA that they felt that their concerns had been ‘brushed aside’, there was ‘no explanation, no opportunity to discuss’ and that they felt there was a ‘failure to investigate properly and take appropriate actions’. Further there were ‘no real consequences’ for wrongdoers.
• There was overall dissatisfaction at the FCA’s handling of the whistleblowing report.

FCA’s response

The FCA has set out initiatives designed to improve the confidence of whistleblowers, namely that it will:

• Provide whistleblowers with more detail on what has been done with the information provided, or reasons for taking or not taking action.
• Improve the use of whistleblowers’ information across the FCA (e.g. making the best use of data and ensuring that end-to-end whistleblowing processes are as efficient as possible).
• Enhance its webform – which is the most popular way for whistleblowers to contact the FCA – to fully capture every whistleblower’s disclosure.
• Engage with the Department for Business and Trade to support a review of whistleblower legislation to enhance the wider whistleblowing system

Discussion

The FCA acknowledges that it is seen as the “listener of last resort” with whistleblowers feeling unable to report to their employer or found that their employer had failed to address concerns. On the face of it, the FCA is failing to provide confidence to whistleblowers. However, despite the dissatisfaction, around half said they would report again to the FCA.

The theme of openness within the new initiatives may address the concerns set out in the survey. It is encouraging that the FCA has looked closely at its own processed and reactively constructively.

One key obstacle is the lack of effective communication and how this interacts with the FCA’s duty (as a “primary recipient”) to maintain confidentiality pursuant to section 348 of the Financial Services & Markets Act 2000. Under this section, the FCA must not disclose any information obtained during its functions, which includes from firms when acting on the basis of a whistleblowing report.

The FCA says the results of the survey, “have caused us to reconsider whether we are able to provide further feedback to whistleblowers consistent with our confidentiality obligations under section 348 where it is necessary to ensure whistleblowers have confidence in us and to better enable us to carry out our statutory functions”. Accordingly, the FCA’s new initiatives commit to greater information being provided to whistleblowers.

However, it is unclear how the new initiatives will meet whistleblower’s concerns if the FCA remains bound by s.348. The FCA may be seeking to rely more heavily on s.348(4), which states that information is not confidential if “it is in the form of a summary or collection of information so framed that it is not possible to ascertain from it information relating to any particular person”. However such framing of information may not meet the concerns of whistleblowers who may expect more details; in which case, a legislative review of s.348 may be a better option.  

Which leads to the most interesting of the FCA’s initiatives: to engage with the Department for Business and Trade to support the review of the wider whistleblowing framework. That government review includes five core research questions:

• how has the whistleblowing framework facilitated disclosures?
• how has the whistleblowing framework protected workers?
• is whistleblowing information available and accessible for workers, employers, prescribed persons and others?
• what have been the wider benefits and impacts of the whistleblowing framework, on employers, prescribed persons and others?
• what does best practice look like in responding to disclosures?

We can expect significant changes to whistleblowing legislation: we can hope for improvements.

Mukhtiar Singh

18 May 2023

Mukhtiar Singh practises in employment law with a particular focus on senior manager and executive cases involving whistleblowing; discrimination; and business and commercial ethics. He works predominantly in three regulated sectors: financial services, healthcare and the police. Through his work as a member of the Advisory Council of whistleblowing charity Protect, he advocates for law reform, culture change and sharing best practice.