New whistleblowing laws have been introduced to help aid employees raise concerns about unlawful practice and behaviour in the financial sector.
Banks, building societies and investment firms are all subject to the new whistleblowing rules, which were first introduced by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) on 7 March 2016.
The new regulations, known as the Senior Managers Regime, are designed to make senior managers in banking and insurance personally accountable for any misconduct that falls under their area of responsibility. It means that senior executives can now be held to account when their junior staff break rules.
Who do the Rules Apply to?
The Financial Conduct Authority (FCA) and the Bank of England have made a list of senior managers who will be affected by the rule change. This is estimated to feature as many as 15,000 workers from the City.
The Senior Manager Regime rules apply to individuals who have been approved by the PRA or FCA and work as senior managers in a UK entity that is either:
- A bank, credit union or building society with over £250m in assets
- An investment firm designated by the PRA
- An insurer subject to the European Parliament’s ‘Solvency II Directive’
What are the New Whistleblowing Rules?
The firms affected by the Senior Managers Regime must appoint a ‘whistleblowing champion’ to oversee the effective operation of the firm’s whistleblowing policies and ensure that employees are protected and not treated unfairly for blowing the whistle at work.
The ‘whistleblowing champion’ must be a non-executive director of the firm. They should ensure that the company is following all the new rules associated with the Senior Managers Regime and are accountable for employees who work under them within their area of the business.
There are a set of rules to guide the conduct of senior managers and another which applies to both senior managers and those who work underneath them.
Conduct Rules for Senior Managers
1. Control your business effectively.
2. Ensure your firm complies with all requirements and standards of the regulatory regime.
3. If you delegate responsibilities then do so effectively and make sure the person taking on the responsibility is appropriate.
4. Disclose any information that the PRA or FCA might reasonably expect from you in an appropriate manner - ‘Whistleblowing champions’ are required to create a report detailing the operation of their company’s internal whistleblowing policies and procedures each year for their board, which can be requested by either the PRA or FCA.
Conduct Rules for Employees of Firms Affected by the Senior Managers Regime
1. Act with integrity.
2. Act with due skill, care and diligence.
3. Cooperate with the PRA, FCA and other regulators.
4. Treat customers fairly and pay them their due regards.
5. Meet the proper standards of conduct for your market.
Senior managers who have been appointed ‘whistleblowing champions’ should have been informed of their appointments and have already received training. They will have until 7 September 2016, when the rules come into effect, to establish whistleblowing operations within their firm which ensure that employees are able to raise concerns internally.
John Marshall is an employment and partnership lawyer with expertise in complex FCA regulatory issues. He works at Slater and Gordon in London.
Slater and Gordon Lawyers can provide immediate representation for whistleblowers anywhere in the UK. Call our whistleblower protection lawyers on freephone 0800 916 9060 or contact us online.