The FCA Undermines Its Own Whistleblowing

The Times article reported that...

“Emails were first diverted from an individual who was considered aggressive but the regulator subsequently used the approach to keep track of several “vocal members of the public”, they claimed. “It was a way of tracking reputational risk by monitoring people who raised concerns and were considered a nuisance.”

“The complainant... alleged that whistleblowing correspondence was inadvertently “diverted to the person the whistleblowing allegations were about” and that the policy “prevented or delayed information from being acted upon.”

The complainant was a former member of staff who had to take their case to the Complaints Commissioner for the FCA.

So in setting up a procedure for handling one person, the FCA let this grow to cover everyone who it considered a nuisance.

What is of particular concern here is the impact this may have had on whistleblowers within the financial services market. After all, the FCA tells people on its website, under the heading “Whistleblowing – make a report in confidence”, that...

“If you think a firm or individual is involved in wrongdoing in an area we regulate and you need to make a report in confidence, you can speak to us. Every report we receive will be considered and we will protect your identity.”

Clearly, if the FCA create email diversion systems that undermine that key ‘in confidence’ test for its own internal whistleblowers, people outside of the regulator thinking of reporting wrongdoing to them could well have second thoughts about doing so. This covers not just potential wrongdoing at regulated firms but at the regulator too.

The ‘in confidence’ test matters, for without it, the whistleblower is exposed to retaliation. And retaliation is something that the regulator has spoken seriously about in the past.

Champion Needed

One of the key rules around whistleblowing at regulated firms is the appointment of a whistleblowing champion...

“A firm must allocate to the whistle-blowers' champion the responsibility for ensuring and overseeing the integrity, independence and effectiveness of the firm's policies and procedures on whistleblowing”

This is a role that is usually expected to be given to a non-executive director, as only they tend to have the independence and authority to exercise those responsibilities. Yet from the descriptions of FCA board members, it appears that the FCA doesn’t have its own whistleblowing champion. For such a large firm, handling many sensitive matters, this stands out as unusual.

The regulator is always going to feel challenged, sometimes forcibly. Most of us will have seen some pretty angry emails in our time, so having some process for handling them makes sense. You have to both keep your ears open but protect staff from abuse. Yet the culture at the FCA has allowed their response to morph out of control. People who are ‘a nuisance’ for example, which can mean what anyone at the FCA wants it to mean. In this case, it included people who were raising serious concerns about wrongdoing, despite being legally protected.

It's time then for the FCA to appoint its own board level whistleblowing champion and for them to publish an annual review of how suitable its policies and procedures are and how well they’re being followed.