Few would dispute that a whistleblower who raises a concern in good faith should be protected from dismissal or other retaliatory action.
However, in a laudable attempt to protect whistleblowers, the current regulatory system has also unwittingly opened firms up to abuse by unscrupulous employees.
In its latest guidance on the minimum standards and best practice around whistleblowing, the Financial Conduct Authority (FCA) has stressed the requirement for financial services firms to ensure concerns raised by all whistleblowers are handled appropriately and confidentially.
Firms should be aware that it is their duty to implement arrangements designed to protect whistleblowers from victimisation, and to oversee the preparation of an annual report to the firm's governing body.
The obligations are both stringent and onerous, with firms now required to take the following steps as an absolute minimum:
• Appoint a whistleblowers' champion to ensure senior management oversight of the integrity, independence and effectiveness of the firm's arrangements
• Implement clear guidance on preventing retaliation against those who blow the whistle
• Apply an investigation process that provides investigators with guidance on how to protect a whistleblower's confidentiality and how to assess the seriousness of whistleblowing reports
• Issue staff with clear guidance on how to raise a whistleblowing concern. It must be made clear to staff that raising a concern with the FCA/PRA is not conditional on a report first being made using the firm's internal arrangements
In a welcome move, the FCA has also highlighted the following as examples of good whistleblowing practice:
• Protectively updating whistleblowers about action being taken following a report being made (although the FCA recognises there may be limits on the information that can be provided)
• Non-executive directors being appointed as whistleblowers' champions
• Whistleblowing training being provided separately to managers and investigators, and to senior leadership teams involved in the assessment of cases
• Monitoring the employment records to identify any potential whistleblowing detriment (e.g. performance appraisals or bonus decisions)
Less welcome, however, are changes the FCA has made to the reporting requirements on the outcomes of whistleblowing employment tribunal litigation: firms are now required to inform the FCA where it loses a whistleblowing claim at the employment tribunal.
Employment litigation is already complex and deep in technicalities, and it is likely that there will be a substantial number of firms unknowingly breaking FCA guidelines in this respect.