UK Insurers & Banks Must Appoint Whistleblower ‘Champion’ in UK Rules

By | October 7, 2015

UK banks and insurers must appoint a senior manager to “champion” internal whistleblowers as regulators attempt to protect tipsters who come forward with evidence of illegal conduct.

The U.K. Financial Conduct Authority and Prudential Regulation Authority published the rules Tuesday, which require banks, building societies and insurers to develop frameworks to better support whistleblowing. The senior manager in charge must be appointed by March and the full suite of rules implemented by September 2016.

Whistleblowers have increasingly been under the spotlight after a number of high-profile company and industry probes were sparked by internal tipsters. A criminal investigation into a multi-million pound accounting scandal at Tesco Plc started last year after an employee reported irregularities to senior management.

“Whistleblowers play an important role in exposing poor practice in firms and they have in the past few years contributed intelligence crucial to action taken against firms and individuals,” said Tracey McDermott, acting FCA chief executive officer. “It is in the interests of the industry and regulators alike that wrongdoing is identified and addressed promptly.”

The new rules stem from recommendations by the Parliamentary Commission on Banking Standards, a government committee set up in 2012 to examine standards and culture in the finance industry following the LIBOR scandal. They tie-in with the Senior Managers Regime scheduled to come into force in March, which requires officials to attest to their responsibilities more specifically in order to better hold them to account.

Other rules from the program include: amending settlement agreements to show workers have a legal right to report improper activities, presenting an annual report on whistle-blowing to the board, informing the FCA if a firm loses an employment tribunal case with a whistle-blower, and making all UK employees aware of the FCA and PRA services.

Whistleblower calls to the FCA have grown 10-fold in the last eight years, according to the regulator’s annual report. Twenty calls in the past year related to misbehavior in the foreign-exchange market, where the FCA levied 1.1 billion pounds ($1.66 billion) in fines against five of the world’s biggest banks for currency-market manipulation in November.

* [Editor’s note: The Financial Conduct Authority explained in a statement that the new rules will affect insurance and reinsurance firms within the scope of Solvency II and to the Society of Lloyd’s and managing agents.]

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