Firms encouraged to be responsive to whistleblowers

Carol Sergeant, Managing Director for Regulatory Processes and Risk, said:

Establishing effective whistleblowing arrangements is enlightened self-interest for firms, and is in the best interests of consumers. We believe that firms can do a lot to help themselves. As a prescribed regulator the FSA provides an alternative route for individuals who feel unable to blow the whistle within their own firms.

The Public Interest Disclosure Act gives important rights and protections to employees - including those in the financial services industry - seeking to disclose apparent wrong-doing in their firms. The key points of the proposed FSA approach are:

• Firms are strongly encouraged to set up their own internal procedures for processing whistleblowers concerns;
  
• Individuals with issues to raise are encouraged to raise them within their firm first. However, the FSA is a prescribed body to which employees can, if necessary, make protected disclosures if they meet the tests laid down in the Act;

• Once the consultation paper and feedback process is complete the FSA will publicise its new dedicated telephone line and email address. These are intended for those people unable or unwilling to blow the whistle within their own firm.

Having a sound whistleblowing policy can help a firm to nip problems in the bud, preventing or limiting any harm to the firm or its customers. And, in responding constructively to public interest whistleblowers, firms reduce the likelihood that they will face claims for compensation under PIDA.

The FSA has centralised its own procedures and arrangements for handling whistleblowing approaches and plans to issue an information sheet once the consultation and feedback process is complete. This will point workers in the industry to their own firms in the first instance but will also give details on how to contact the FSA on a new whistleblowers telephone line and email address for those who choose to come to us. The information sheet will be placed on the FSA website in a format that firms can use within their own internal procedures.

The Consultation Paper contains draft guidance for proposed inclusion in the FSA Handbook of Rules and Guidance. Responses should be sent to the FSA by 5 October 2001.

Notes for editors

1. Consultation paper 101: Whistleblowing, the FSA & the financial services industry. This consultation is only about unsanctioned disclosures which workers may want from time to time to make to the FSA: it does not affect the normal day to day relationship between regulated firms and the FSA.

2. The Public Interest Disclosure Act came into force on 2 July 1999. It is employment legislation that creates a framework for whistleblowers across private and public sectors. It protects workers who meet the tests laid down in PIDA for making disclosures of certain information in the public interest by allowing such individuals to bring a legal claim in respect of victimisation by their employer if they should suffer as a result of making such disclosures. The Act defines a "qualifying disclosure" as any disclosure of information which, in the reasonable belief of the worker making the disclosure, tends to show one or more of the following has been committed, is being committed or is likely to be committed:
   • a criminal offence
   • a failure to comply with any legal obligation
   • a miscarriage of justice
   • the health and safety of any individual endangered
   • damage to the environment
   • deliberate concealment of information relating to any of the above.

3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

4. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.