Acting to stop harm: the FCA and Appointed Representatives
As the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) publish new rules on whistleblowing today, Andreas White and Louise Hodges examine what this means for firms in light of the forthcoming Senior Managers and Certification regimes coming into force in March 2016 alongside new Conduct Rules.
The FCA and PRA are on a mission to improving individual accountability in the UK banking sector with a focus on Senior Managers. This is part of their goal of changing the culture of banking and financial services. Acting upon one of the recommendations of the 2013 Parliamentary Commission on Banking Standards (PCBS), they are bolstering the whistleblowing regime to ensure banks put in place mechanisms to allow their employees to ‘blow the whistle’ and raise concerns internally. In addition they must appoint a senior manager to take responsibility for the effectiveness of these arrangements: the “whistleblowers’ champion”. The whistleblowers’ champion must be in place by 7 March 2016.
Who does this apply to?
Seeking to build on existing practice in the financial services sector, the new rules will apply to apply to deposit-takers (banks, building societies, credit unions) with over £250m in assets, as well as PRA designated investment firms (large investment banks) and insurers subject to the Solvency II directive. The FCA clarifies that the guidance is non-binding for all other firms under FCA supervision.
What do firms need to do?
Tracey McDermott, acting FCA chief executive, commented today that:
“These rules aim to encourage a culture where individuals feel able to raise concerns and challenge poor practice and behaviour”.
She confirmed that following the appointment of a whistleblowers’ champion by 7 March 2016, from September 2016 firms will be required to:
These regulatory obligations applicable to the financial services sector are over and above existing rules on the protection of whistleblowers under employment law. The financial sector has in recent years witnessed a clear trend of increasing whistleblowing to the regulators, but the regulators are determined to ensure that there is also growing awareness of internal whistleblowing mechanisms and increased protection for internal whistleblowers, as well as accountability at the most senior level on the part of the whistleblowers’ champion for the way in which whistleblowing is handled and whistleblowers are treated. The new Senior Managers and Certification regimes will also encourage more individual whistleblowing in the financial services sector, as individuals seek to ensure that they have taken all due steps to report and escalate concerns in order to protect their own position.
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