Incidences of whistleblowing in the financial sector are on the rise, according to a new report by global investigations firm Kroll. This highlights a 35% increase in the number of whistleblowing cases reported to the Financial Conduct Authority (FCA) over the past year.
The FCA, in response to a freedom of information request submitted by Kroll, has revealed that it received 5,150 contacts to its whistleblowing helpline between November 2012 and October 2013, compared to 3,813 in the same period the previous year.
FCA whistleblowing cases
Kroll says that this increase has led to a higher number of new cases being created, in which actionable intelligence derived from whistleblowing is disseminated to departments within the FCA and other regulators and law enforcement agencies.
In the third quarter of 2013, for example, the number of new cases increased by 72% when compared to the same period the previous year (254 in Q3 2013 compared to 148 in Q3 2012).
SEC whistleblowing cases
Interestingly, UK whistleblowers also appear to have been the dominant source (16%) of overseas tip-offs to the US Securities and Exchange Commission (SEC) in the last US fiscal year.
Overall, separate analysis by Kroll of the SEC’s annual report on its whistleblower programme reveals that of 3,238 tip-offs received in total in the past year, 404 (12%) came from outside the US, up 25% on the previous year. The company highlights the SEC policy of making payouts to whistleblowers as being likely to encourage more of these international tip-offs.
“The increase in overseas whistleblower tip-offs to the SEC shows the policy’s impact on international companies in particular,” said Benedict Hamilton, a Managing Director at Kroll. “Those thinking about reporting corporate malpractice might be tempted to go to the US regulator rather than their own company, wherever they are based in the world, in the hope of receiving a substantial reward.”
A financial sector whistleblowing rewards policy is not yet in place in the UK, but is under consideration by the authorities.
Whistleblowing Commission report
In fact the Whistleblowing Commission, an independent body set up by whistleblowing charity Public Concern at Work, recently considered the question of rewards in its ‘Report on the effectiveness of existing arrangements for workplace whistleblowing in the UK’, and came to the conclusion that they should not be permitted.
It highlighted a number of reasons why this was the case, all of which had been raised by respondents to an earlier consultation. A rewards policy, it said, was:
a) “inconsistent with the culture and philosophy of the UK
b) undermines the moral stance of a genuine whistleblower
c) could lead to false or delayed reporting
d) could undermine credibility of witnesses in future criminal or civil proceedings
e) could result in the negative portrayal of whistleblowers
f) would be inconsistent with current compensatory regime in the UK.”
Financial sector regulation
Rewards for financial sector whistleblowers are just one of the approaches being considered by financial regulators in the wake of the banking collapse and high profile scandals such as the mis-selling of PPI and Libor-rigging.
Last year, the Parliamentary Commission on Banking Standards published a number of proposals, aimed at reforming the banking sector. These proposals included deferring bonus payments for as long as ten years and jailing senior bankers for reckless misconduct. (See our earlier blog for more details).
The Government also ran a consultation exercise seeking views on whether the current whistleblowing framework is operating effectively in today's labour market. This consultation closed in November, and the Government is currently analysing the responses.
Contact Lewis Nedas’ Criminal Lawyers in London
If you have been affected by whistleblowing in the financial sector and require specialist criminal defence advice please contact our solicitors Jeffrey Lewis or Siobhain Egan on 020 7387 2032 or complete our online enquiry form here.
This blog post is intended as a news item only - no connection between Lewis Nedas and the parties concerned is intended or implied.
