Far reaching rules for financial services businesses to create clear channels for whistle blowers to report concerns and to protect those that ‘blow the whistle’ take effect from Wednesday (7 September), says law firm Howard Kennedy.

 The Bank of England’s Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA) rules take effect from 7 September 2016 and are designed to build on the current good practice in financial services businesses and encourage staff to ‘blow the whistle’ on all types of wrong-doing, not just reportable offences under current whistleblowing laws.

 The new rules apply to UK deposit-takers with assets of £250m or greater (including banks, building societies and credit unions), PRA-designated investment firms and insurance firms subject to the Solvency II Directive, plus the Society of Lloyd’s and managing agents.

 Lydia Christie, a Senior Associate in the Employment Law team at Howard Kennedy, says: “The new rules are far-reaching: they require firms to establish an independent whistleblowing channel through which reportable concerns can be raised and will extend to a requirement not to include any deterrent to whistleblowing in employment contracts and settlement agreements.  They will restrict the use of warranties, where employees are asked to confirm that they have not made a whistleblowing report.

 “The new rules also extend to disclosures made by the self-employed, volunteers, non-executive directors, agency and contract workers, agents and suppliers.”

 In March this year, affected financial services businesses were required to nominate a whistleblowing champion, who should be drawn from the non-executive directors if there are any, to oversee the implementation of whistleblowing policies and procedures under the new rules. The whistleblowing champion’s responsibilities include:

• Ensuring and overseeing the integrity, independence and effectiveness of the firm’s policies and procedures on whistleblowing and associated policies to protect whistleblowers from being victimised because they have disclosed reportable concerns;
• Having oversight of the firm’s transition to its new arrangements for whistleblowing; and
• Overseeing the preparation of an annual whistleblowing report to the board.

 Lydia Christie of Howard Kennedy says: “The types of reportable concerns and those who can report them are much broader under the new rules than under current whistleblowing law.  It is likely that managers will require more specific training to recognise whistleblowing under the new rules and it will be the responsibility of the whistleblowing champion to ensure that this takes place.”

 Lydia continues: “The new rules aim to encourage whistleblowing and minimise retaliation against whistleblowers.  A firm’s fitness and propriety will most likely be called into question by the Financial Conduct Authority where there is any evidence of retaliation by a firm against a whistleblower.”