Close site search

Simply start typing to search Changeboard and then press enter

Have we seen the last whistleblowing scandal in banking?

Posted on by

In the wake of the financial crisis in 2008, the financial services sector saw wave after wave of high profile whistleblowing scandals hit the headlines.

Changes afoot

These exposed the involvement of banks in such colourful activities as Libor manipulation, tax evasion, mortgage fraud and money laundering. These revelations were extraordinary, and even to those who had spent all of their careers in the sector, unimaginable.

In an attempt to avoid a repeat of 2008, the Parliamentary Commission on Banking Standards (PCBS) was established in 2012. The report they produced the following year, “Changing Banking for Good”, identified that whistleblowing complaints were rare and there were inadequate levels of protection for whistleblowers.

The PCBS went on to make wide ranging recommendations to promote better handling of whistleblowing complaints in banks and encourage people to raise their concerns. These recommendations are the source of the whistleblowing rules coming into force today. 

Whilst the new rules are currently only mandatory for banks, if you work in any regulated business, these rules will apply to you by 2018. The regulators are also encouraging every regulated businesses to voluntarily comply with the rules now.

From today, banks must:

•    Provide a confidential whistleblowing hotline which is accessible not just for employees, but any member of the public who wishes to blow the whistle on their activities;
•    Tell their staff about the whistleblowing services already provided by the financial regulators (the FCA and PRA), and how to access them;
•    Present an annual Board report on whistleblowing;
•    Inform the financial regulators if it loses a whistleblowing case in an employment tribunal; and
•    Ensure that its staff are appropriately trained on whistleblower protection.

Whistleblower's champion

In addition to the above, each bank must appoint a senior manager (known as a “whistleblowers’ champion”) who takes ultimate responsibility for ensuring that whistleblowing systems and processes are robust and fit for purpose. The whistleblowers’ champion role is hugely important because the regulators consider the ability of the bank to handle whistleblowing complaints properly directly impacts on their fitness and propriety to carry out regulated work.

One particularly controversial aspect of the new whistleblowing rules is whether they create a duty for senior employees to blow the whistle on any concerns. The financial regulators say the rules do not, but it’s hard to square this with the explicit wording of the rules, which state that senior managers must report any concerns to the regulator that it would wish to be notified of. Senior employees in banks will understandably be concerned that they may find themselves subject to regulatory sanctions if they fail to notify the regulators of all potential issues. It’s possible that going forward, senior managers make many more disclosures to the regulators in order to protect their position. However, it’s easy to see that this could be a significant drain on the regulators resources, and could reduce their effectiveness.

So, have we seen the last whistleblowing scandal in the banking sector? No. In fact, I would expect we see more, not fewer, scandals, as the rules are likely to bring further malpractice to the attention of the regulators and public.

Christopher  Tutton

By Christopher Tutton

Chris is an employment lawyer at Constantine Law, a London based employment law firm. He helps companies solve their employment law issues and has particular expertise working with companies in the financial services, recruitment and construction sectors.

Content by email

Thanks! You have been subscribed to receive emails about the following subjects.

Get more with Changeboard

Changeboard is a global HR jobs site, career advice resource and events platform to help HR and recruitment professionals find the perfect job to progress their careers. We're here to help you change the way you work.

Register now

Changeboard Magazine

Changeboard is read by more than 22,000 senior leaders in print and 85,000 online.

  • Get Changeboard Magazine
    online

  • Get Changeboard Magazine
    on mobile

  • Get Changeboard Magazine
    in print

Subscribe to Changeboard today for:

  • Engaging and relevant decision-support content
  • Exclusive interviews with CEOs & HR leaders
  • In-depth profiles, case studies & insights from progressive senior HR & resourcing practitioners
  • Stimulating career advice, delivered in bitesized chunks to help busy professionals advance their careers efficiently.
Get the Changeboard magazine
Get Changeboard Magazine
Loading

Job search saved

Your search has been successfully saved.

Register or log in to manage job alerts.