UK watchdog Financial Conduct Authority (FCA) has unveiled a campaign to encourage individuals working in financial services to report potential wrongdoing.
The project, ‘In confidence, with confidence’ will also remind them of the confidentiality processes in place.
As part of the campaign, the FCA has published materials for firms to share with employees, as well as using its events to highlight it.
The regulator has also produced a digital toolkit for industry bodies, consumer groups and whistleblowing groups to encourage individuals to have confidence to step forward.
Whistleblowers that report to the FCA will have a dedicated case manager. They can meet with the FCA to discuss their concerns and can receive optional regular updates throughout the investigation. Every report the regulator receives is reviewed and the FCA says it will protect individual whistleblowers’ identities.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: ‘We want all whistleblowers to feel welcomed by us and to feel safe because of us.
“We listen to all whistleblowers and, if they shine a light on serious misconduct, we want to make sure we act responsibly. When whistleblowing works well, it helps consumers, markets and firms and keeps everyone safe and that is our aim.”
James Pearcy-Caldwell, chief executive of Aisa Group, welcomes the campaign and the appointment of a dedicated case manager, but believes this action has taken too long.
“Hopefully, this will encourage people within the industry to report and seek to assist the FCA in preventing rogue regulated and unregulated entities and individuals from operating and damaging clients,” he told International Adviser.
“However, more can be done including regional events that allow confidential feedback to the regulator, not only about whistleblowing, but also the impact of rules and regulations.
“It has taken far too long for the FCA to seek to take action on whistleblowing, to listen to the industry and to acknowledge that the Financial Services Compensation Scheme (FSCS) fund is not viable in its current form.
“If they had spent the last five years actually listening to ‘interested’ parties then we would not now have the problems we have.
“In other words, yes this is a positive development, but it is nothing more than that and far more can be done.”
Speaking to the FCA
The FCA said it has been investing in increased resourcing to support whistleblower interaction, including increasing the headcount on its whistleblowing team. This specialist team are trained to debrief and interact directly with whistleblowers, as well as liaising with various departments across the organisation.
As part of the FCA’s aim to provide a smoother internal process, it has introduced a mandatory e-learning module for all staff, to help identify potential whistleblowers and make sure any intelligence received by the FCA is dealt with correctly and that identities are protected.
The whistleblowing team are developing a confidential web form, increasing the ways in which people can make disclosures to them.
Phil Billingham, director of Perceptive Planning, told IA: “My immediate concern is that this seems to only focus on employees of larger firms ‘whistleblowing’ their own firm. Whilst this is fine, there is legislation in place to facilitate this.
“What this initiative does not address the well-known – and admitted by the FCA – concern that when individual advisers alert the FCA about real issues that pose a threat to consumers – mini bonds et al – then the FCA themselves admit they are slow to react, if they ever react at all.
“Many advisers, myself included, find it galling that we warn the FCA of issues, we seem to be ignored, and then end up paying outrageous FSCS levies to compensate consumers who the FCA allowed to participate in scams after the first warnings from the profession.
“It would be better for everyone, especially consumers, if the FCA changed their attitude and took our whistleblowing seriously at last.”
The watchdog added that it “would like to remind firms that culture and governance remain a key priority for the FCA”.
“Its whistleblowing rules require firms to have effective arrangements in place for employees to raise concerns, and to guarantee these concerns are handled appropriately and confidentially,” the regulator said.
“The FCA introduced a requirement for firms to appoint a whistleblowers’ champion to make sure there is senior management oversight over the integrity, independence and effectiveness of the firm’s arrangements.
“These include those arrangements designed to protect whistleblowers from victimisation, as well as overseeing the preparation of an annual report to the firm’s governing body.”
Eugen Neagu, director at N2 Asset Management, added: “I think this new campaign does not change anything, many IFAs have whistleblown before and will continue to do so, when they come across firms not acting accordingly to the rulebook.
“What is frustrating is that we do not get any feedback, and sometimes we see that it takes a long time until there is some sort of regulatory action taken as a result against the firms we whistleblow.”