CISI challenges PRA/FCA whistleblowing rules and proposals for banks ​

by Lora Benson | Jan 19, 2017

The PRA/FCA could offer more support to whistleblowers in UK based branches of overseas banks than it is currently proposing and the requirement for a whistleblowing policy should not be determined by a firm’s asset base, says the Chartered Institute for Securities & Investment (CISI).

The CISI, the 40,000 strong global professional body for securities, investment, wealth and financial planning professionals has broadly welcomed the FCA Consultation Paper which proposes to extend whistleblowing rules to UK branches of overseas banks.

The CISI sees the proposals as a step in the right direction, but it does raise some concerns:

• Although the FCA has proposed to “inform UK-based employees of UK branches of overseas banks” of the FCA and PRA whistleblowing services, the CISI believes the FCA could do more than merely “inform” these employees. The CISI suggests a requirement on the banks concerned to train staff on the legislative protection (if any) which is available in their home countries, should they choose to blow the whistle.

The aim of this additional requirement, says CISI, would be to provide further guidance for employees “who may have little or no information about the whistleblowing law and/or regulation in their home country.”

• Although the FCA has proposed to inform UK based staff of UK branches of overseas banks which sit alongside a UK-incorporated bank, of the subsidiary’s whistleblowing arrangements, the CISI is concerned that individuals may blow the whistle within firms about an issue which is not currently classed as protected disclosure under the Public Interest Disclosure Act (PIDA), and therefore find themselves without the protection of the law.

In the light of the above, the CISI has encouraged the regulator to require firms to make it clear to staff which types of disclosures are/are not covered under PIDA and what protection will be afforded to them if they choose to blow the whistle regarding an issue which falls outside a protected disclosure.

• The FCA has indicated in the proposals that it will not require UK branches of overseas banks to implement any of the other PRA/FCA rules related to whistleblowing, owing to differing legislation and cultural approaches around the world.  The CISI agrees with this approach.

However the CISI noted that the FCA could do more to encourage best practice within UK branches of overseas firms. It suggested a requirement for an annual report and that this be prepared for the branch’s senior management, which would ensure that the bank branch’s response to whistleblowing concerns and treatment of whistleblowers was being captured and evaluated, in the interest of whistleblowers themselves.

Simon Culhane, Chartered FCSI and CISI CEO said: “We have always maintained that whistleblowing is a last resort and that it should form part of a “Speak Up” culture within firms. 

“However the whistleblowing rules introduced by the FCA in October 2015 stipulate that the rules would only apply to a narrow base composed of UK based deposit takers with assets greater than £250m. This current PRA/FCA Consultation Paper on Whistleblowing in UK branches of overseas banks does not propose any changes in that rule. Why don’t these whistleblowing principles apply to all firms regulated by the PRA/FCA? Why should the size of the asset base of a firm determine whether a whistleblowing policy exists or not?

“We also suggested, when the rules were published in 2015, that a protection fund be introduced, which would pay a whistleblower’s salary, if he or she lost their job because they spoke up. This could be for up to six months or, if shorter, the time it took for the individual’s case to be resolved at an employment tribunal. We maintain this could be a valuable safety net for those who wish to speak up, but who are concerned about suffering financially as a result.”

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