In 2002, Time’s Persons of the Year were ‘The Whistleblowers’ with its cover picturing former Enron VP Sherron Watkins¹, FBI Agent Coleen Rowley² and WorldCom VP Cynthia Cooper³. These individuals were identified as ‘women of ordinary demeanour but exceptional guts and sense’, for blowing the whistle.
A CNN/Time poll at the time revealed that nearly six out of every ten Americans saw whistleblowers as heroes. However, that poll also highlighted that 57% thought whistleblowers faced negative consequences at work most of the time. Twenty years later, some may say that little has changed and highlight that financial services firms in particular still have a lot of work to do.
Whistleblowing in financial services
Although regulated by the Financial Conduct Authority (FCA), much of the regulation of financial services firms is dependent on self-regulation and self-reporting. We are all users of financial services firms – whether it be online banking, car financing or pension. It is therefore vital that these firms are operating in line with the rules set down by the FCA, specifically that fair treatment of customers is consistently at the heart of their business model. Whistleblowers are therefore key in ensuring that the self-regulation and self-reporting of financial services firms is effective. However, experience tells us that financial services firm need to do more to empower – or, at the very least, protect – whistleblowers.
“All organisations need to embed a culture of openness which starts with clear policies.”
We frequently warn clients that a stigma continues to attach to those that blow the whistle. The FCA investigation into Jes Staley, CEO of Barclays Bank from 2015 to 2021, provides some illumination into how some within financial services continue to view whistleblowers.
In 2018, the UK’s FCA found that Mr Staley had broken rules of conduct by seeking to unmask a whistleblower whilst CEO of Barclays Bank. Although Mr Staley was fined £642,000 by the FCA and forced to repay £500,000 in bonuses, the FCA stopped short of concluding that he lacked integrity which would have ended his career. In addition, Barclays itself did not terminate Mr Staley’s employment. Many at the time concluded that, in the first big test of the FCA’s approach to whistleblowing, it was unjust that a chief executive who tried to identify a whistleblower had been allowed to keep his job.
Last year the FCA launched ‘In confidence, with confidence’, a campaign aimed at encouraging those working in financial services to report potential wrongdoing to the FCA. The FCA also took the step of ‘reminding’ firms that culture and governance remained key priorities for the FCA and its whistleblowing rules require firms to have effective arrangements in place for employees to raise concerns.
An important rule requires firms to appoint a whistleblowers’ champion to ensure senior management oversight over the integrity, independence and effectiveness of the firm’s whistleblowing arrangements. However, rather than being a vocal champion of whistleblowers, too often such person is invisible to the wider organisation and impossible to identify from the organisation’s website. To help combat this, we have suggested to the FCA that there should be a public and searchable register of whistleblowers’ champions that they should be properly resourced and have appropriate training.
What can organisations do to break the stigma?
Our experiences of advising whistleblowers highlights that a view of whistleblowers as troublemakers persists within some financial services organisations.
All organisations need to embed a culture of openness. That starts with clear policies (which aren’t buried in handbooks), but also requires ongoing training at every level of an organisation so that managers listen when concerns are raised (and know how best to escalate such concerns) and all staff are encouraged to raise concerns without fear of retribution.
“An important rule requires firms to appoint a whistleblowers’ champion to ensure senior management oversight over the firm’s whistleblowing arrangements.”
Such policies and training also need to reflect the law as too often we see firms seeking to redefine the whistleblowing legislation. A prime example being whistleblowing policies that only recognise whistleblowing where an employee has blown the whistle through a specific channel. However, that doesn’t reflect the law and training of managers is therefore key in ensuring that whistleblowing doesn’t go unreported or, worse still, employees face retaliation for raising concerns.
How organisations handle whistleblowing concerns is also key. Although some will raise concerns anonymously, where the whistleblower makes themselves known, they should be actively involved in any investigation (to the extent that they feel comfortable).
Ultimately, to carry out effective investigations, those investigating need to work closely with those raising concerns to fully understand and address these issues.
It is 20 years since we celebrated the whistleblower. If we want to ensure accountability within financial services firms, we need to celebrate the whistleblower again.
For further information, please contact:
Claire Christy, Partner, Withersworldwide
James Hockin, Senior Associate, Withersworldwide