The Financial Conduct Authority (FCA) will be looking closely at how firms deal with whistleblowers and whether appropriate policies and arrangements are in place.
These whistleblowing rules aim to encourage a culture where individuals feel able to raise concerns and challenge poor practice and behaviour. Firms must allow for disclosure of information by all people (internal and external to the firm) and the ability to disclose information anonymously.
Tracey McDermott, acting Chief Executive, FCA, said: “It is in the interests of the industry and regulators alike that wrongdoing is identified and addressed promptly. For individuals to have the confidence to come forward, it is vital that firms have in place adequate policies on dealing with whistleblowers”
The new rules bring UK regulation on whistleblowing more in line with the US Securities and Exchange Commission which already has formal regulations around arrangements for provision of information. However the FCA rules do not include payment for information.
The new rules require a firm to:
While most firms subject to the new rules will have an established whistleblowing system in place, the new rules will require them to consider the adequacy of this system, the effectiveness of controls and communication and training of employees.
The FCA is now setting a standard for certain regulated firms. Even if you are not in a regulated industry, now may be the time to reconsider whether your own arrangements are sufficient to help you identify and respond to allegations of wrongdoing in your business.
Ken Milliken, Associate Partner in KPMG’s Forensic practice says:
“The FCA guidance on this issue is helpful in setting a standard which we hope will help further develop how organisations in the UK respond to this issue. Regardless of the sector, as organisations grow, many look to outsource their whistleblowing arrangements, believing that having a specialist, independent, provider of these services results in a higher volume of reports of matters of concern. Regardless of whether a whistleblowing line is internally operated or outsourced, having a hotline in place is nothing on its own. Employees need to be regularly reminded of the existence of the line. They also need to be able to trust its security and confidentiality and that their employer will respond properly when a matter of concern is reported. If a whistleblowing line does not ring regularly then it is not working effectively!”
KPMG has recently launched its Faircall service in the UK which provides an outsourced ethics line/whistleblowing services for clients. The new Faircall line extends services which KPMG member firms have been providing in Australia and South Africa for many years. If you are a UK based company with operations in the UK or across the globe, you can use Faircall to give your employees 24/7 access to a range of secure, independent reporting mechanisms staffed by Forensic employees of KPMG in the UK and other KPMG member firms. These include a secure email inbox, toll free telephone reporting from 70 countries and web-forms.
There is much more to dealing with whistleblowing than merely setting up a line. However, giving employees access to a range of secure, trusted routes to report concerns is a very good start.