Is the UK's main securities regulator keeping its commitment to whistleblowers who bring forth claims of wrongdoing at companies and financial firms?
The United Kingdom’s Financial Conduct Authority (FCA) has assessed fewer than one-in-four of the 1,025 reports it received from whistleblowers in 2021, and it is also still assessing some 438 reports from the years 2019 and 2020.
The number of reports remaining to be assessed was disclosed in response to a request made under the Freedom of Information Act by Thomson Reuters’ Regulatory Intelligence (TRRI) group. The FCA’s response revealed that of the 1,025 reports filed by whistleblowers, just 238 have been fully vetted.
“We know that for most whistleblowers who turn to the FCA, it is a last-ditch effort by them to help avert what could be a financial crisis,” says Mary Robinson MP (Con), chair of the All-Party Parliamentary Group for Whistleblowing. “I am concerned that only [one-fourth] concerns raised to the FCA have been looked at, and that over 868 cases remain outstanding from 2021 and hundreds of cases remain to be investigated from previous years.”
Of those assessed in 2021, seven cases led to “significant action” being taken by the regulator, while 238 resulted in no further action.
“Significant action may include, but is not limited to, enforcement investigation, [under Section] 166 [in the Financial Services and Markets Act of 2000] skilled persons reports or the variation/withdrawal of permissions,” the FCA states in its response to TRRI’s FOIA request. The response also revealed that 149 reports from 2019 and 304 reports from 2020 were still being assessed by the FCA. At the same point last year, 316 reports from 2019 and 630 from 2020 remained to be assessed.
Of the outstanding reports cleared by the regulator in the last 12 months, 18 from 2019 and 33 from 2020 resulted in significant action.
Drop in reports
The total number of whistleblowing reports the FCA received in 2021 fell despite the regulator running a high-profile campaign to encourage employees of financial services firms to speak-up if they encountered wrongdoing.
In March 2021, Mark Steward, executive director of FCA enforcement and market oversight, launched the campaign to assure financial services workers it was safe to speak up. “We want all whistleblowers to feel welcomed by us and to feel safe because of us,” Steward said at the time. “We listen to all whistleblowers — and, if they shine a light on serious misconduct, we want to make sure we act responsibly.”
Georgina Halford-Hall, chief executive of Whistleblowers UK, which acts as secretary for the All-Party Parliamentary Group on Whistleblowing, says they have seen an increase in the number of people raising concerns about the way that the FCA addresses issues raised by both staff and the public. “The high-profile campaign to relaunch the FCA whistle-blowing helpline led by Mark Steward last year has failed to reverse the steady downturn in number of people reporting concerns to the FCA over the last three years, despite an increase in the number of UK whistleblower reports being made to its US equivalent, the Securities and Exchange Commission,” says Halford-Hall. Indeed, the number of UK-based employees making reports to the SEC is rising. In 2021, 132 people chose to report to US authorities, up from 84 in 2020 and 44 in 2019.
Allegations
The TRRI FOIA request also asked for a breakdown of categories against which the FCA categorizes allegations. The biggest spike in allegations in 2021 occurred in possible breaches of the Financial Services and Markets Act, about which the FCA received 178 reports last year, up from 28 in 2020 and 45 in 2019. The number of allegations about client assets, and crime, fraud, unregulated investment products, and bribery and corruption also increased in 2021.
In fact, overall allegations were up in 11 of the 31 categories identified by the FCA, including the category corresponding to the FCA’s own whistle-blowing rules and indicates that individuals are coming to the regulator after they have been mistreated by their employer after first making a whistleblowing report internally. In all, 74 reports were made under this category in 2021, up from 62 in 2020.
Last month, the UK’s Whistleblower Bill received its first reading in the House of Commons. The bill, which was introduced by Robinson, seeks among other things to ensure whistleblower reports are assessed in a timely manner. “As the chair of the all-party parliamentary group for whistle-blowing, I have met countless brave individuals who have dared to speak ou,” Robinson said in parliament on April 26. “Many have suffered emotional damage from the treatment they have experienced. Many have faced threats to their livelihoods and suffered consequences at work — retaliation, harassment, unfair dismissal, and blacklisting. …Meanwhile, the wrongdoing they highlighted is swept under the carpet.”
Robinson explains that the new Whistleblowing Bill will transform the way whistleblowing is treated in the UK by providing vital help to regulators and whistleblowers and improving the process that gives rise to delays.
Halford-Hall agreed, adding that the bill would impose greater standards, “including increased accountability on the FCA” and it also would provide “reassurance to whistleblowers that they will be listened to and action where necessary will be taken.”
By comparison, the European Union’s whistleblowing directive sets a firm deadline by which reports must be assessed and requires feedback on the outcome of any investigation be given to the whistleblower. This timeline cannot exceed three months.
Manpower
An FCA spokeswoman said the FCA took whistle-blowing complaints seriously in a statement issued on May 5. “Cases that are listed as ‘under assessment’ are in progress, with work being carried out,” the statement read. “The data inevitably does not provide a full picture on the relative complexity of the reports we receive or, for example, whether they contain multiple concerns.”
Further, the FCA whistleblowing team remains the same headcount as in 2020, despite the growing backlog in reports being assessed. There are 16 full-time staff and two additional staff in a supervisory capacity dedicated to triaging reports from whistleblowers.
“The whistleblowing team acts as the interface between the FCA and the whistleblower — and between the whistleblowers’ information and the rest of the FCA. The assessment of whistleblowing intelligence is carried out by staff across the FCA,” the regulator noted in the FOIA response.
