On the 14 January 2021, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) imposed a number of additional requirements on two firms in relation to the whistleblowing systems and controls.
The companies in question were Tokio Marine Kiln Insurance Ltd and Tokio Marine Kiln Syndicates Ltd (together, ‘TMK’), who in December 2019 made a voluntary disclosure to the two regulatory bodies relating to the outcome of an internal whistleblowing investigation, addressing what they considered to be potential shortcomings of their whistleblowing systems and controls. Following a year of discussions with the regulators TMK made an application in December 2020 for the imposition of new requirements, a request which was duly complied with.
Some of the new requirements imposed on TMK by the FCA and PRA include a written report detailing the steps taken to improve their systems, along with written confirmation for the calendar years 2020, 2021, and 2022 of various metrics such as the number of reports received and all training initiatives delivered throughout the year.
The imposition of these new requirements is a recognition from the financial regulators that the firms have made a commitment to improve their internal processes, and are giving them an opportunity and helping hand to do so.
This is an important development in the field of protected qualifying disclosures because it underlines that the financial services industry is in some cases going to significant lengths to change the attitude towards whistleblowing and engage with their financial regulators to help them do so.
What is whistleblowing and what must businesses do?
Whistleblowing refers to the act of reporting or exposing wrongdoing, either within an organisation or externally. The act of whistleblowing was brought to the forefront of public consciousness in the 1980s and early 1990s following a number of high-profile scandals, and in more recent years following the actions of high profile whistleblowers such as Edward Snowdon.
In the UK, whistleblowing protects employees and workers who make a ‘protected disclosure’ which comprises of a number of elements:
A disclosure of information;
A reasonable belief that the information shows specific wrongdoing has occurred or is likely to occur, such as a criminal offence, a breach of any legal obligation or a danger to the health and safety of any individual;
A reasonable belief that the disclosure is in the public interest; and
Potentially further conditions, depending on the identity of the person to whom the disclosure is made.
Whilst there is no positive obligation on non-FCA regulated employers (in most cases) to have a whistleblowing policy, there is a legal obligation that an employee cannot be dismissed or subjected to any detriment because they have made a protected disclosure.
There is no requirement to have a whistleblowing policy but it is highly recommend. Not only does it show a commitment by an employer that they are ready and willing to listen to workers’ concerns, it is also important for a wide range of business reasons, such as avoiding external disclosures by employees, assisting in ensuring compliance and internal control, and encouraging a culture where concerns are reported early and wrongdoing is addressed promptly.
In the last year with the challenges to workplace working brought about from Covid-19, some employers have not only had to deal with employees asserting health and safety rights to be protected from working in the workplace due to concerns about an imminent danger of infection, but also making these concerns known and whistleblowing disclosure of health and safety concerns.
If you would like to discuss formulating a whistleblowing policy, or having your current one reviewed. please get in touch with a member of our employment team.