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New Rules on Whistleblowing take effect

New Whistleblowing Rules

September 2016

From 7th September this month, the FCA’s new rules on whistleblowing took effect.

Published last year, the FCA’s new rules apply to UK deposit-takers (with assets of £250M or over), including banks, building societies and credit unions. In addition, it affects PRA-designated investment firms and insurance firms within the scope of Solvency II and Lloyds. In essence, all those firms that the Senior Managers Regime currently applies to.

• FCA Policy Statement PS 15/24: New Rules on Whistleblowing for deposit-takers, PRA-designated investment firms and insurers

Aim of the new whistleblowing rules

The new rules on whistleblowing are designed to promote disclosure by encouraging individuals to speak up about concerns over poor practice and behaviours.

The rules are also applicable to all other FCA regulated firms, but on a non-binding basis.

These new rules require affected firms to put in place whistleblowing procedures to allow their employees to raise concerns internally and an obligation to appoint a senior person to take responsibility for the effectiveness of these arrangements. Firms within the Senior Managers Regime will have been required to appoint this ‘Whistleblower’s Champion’ since 7th March 2016, when the SMR came into effect. However, they have had another six months until now to comply with the requirements of the new whistleblowing rules.

What is required?

The Whistleblower’s Champion should be a role that is has been assigned to a Senior Manager, and preferably someone that is UK-based.

It will have been the Whistleblower’s Champion that should have overseen and ensured that their firms now have in place the following whistleblowing measures:

• Internal whistleblowing arrangements: These must have been put into place to deal with all types of disclosure and from all manner of persons;
• Inform UK-employees of their legal rights: Whilst internal procedures may be encouraged, firms must have told their UK-based employees about their legal rights to approach the UK regulator using the FCA whistleblowing service directly rather than having raised concerns internally first;
• Appointed Representatives & Tied Agents: Principal firms are also to ensure their Appointed Representatives and Tied Agents have told their UK-based employees about their legal rights to approach the UK regulator using the FCA whistleblowing service directly rather than having raised concerns internally first;
• Settlement Agreements: These must now include wording explaining that workers have a legal right to blow the whistle. Clauses that ask an employee to confirm that they are not aware of information that could form the basis of a protected disclosure or whether they have made a protected disclosure are not longer allowed;
• Annual Whistleblowing Report: This annual must be presented to the board for which the Whistleblower’s Champion should have overseen its preparation; and
• Measures to inform the FCA: Where an employment tribunal finds in favour of a whistleblower the firm must have measures to inform the FCA.

Help with Effective Whistleblowing Procedures

If you would like help in designing and implementing an effective whistleblowing policy or procedures for your business or you would like assistance in reviewing and assessing the effectiveness of your existing whistleblowing procedures, please get in touch with our Regulatory Support team.