The Chartered Institute for Securities & Investment (CISI) has commented on the Financial Conduct Authority (FCA)’s new rules on whistleblowing in order to formalise good practice when it comes to blowing the whistle in the financial sector. Here, CISI’s CEO publicly comments on why the new rules are only a job half done…
The Chartered Institute for Securities & Investments (CISI) broadly welcomes the FCA new rules on whistleblowing but regards them as only a start with plenty more to do. CEO of CISI, Simon Culhane, Chartered FCSI, said, “We are very encouraged to see greater emphasis given to whistleblowing and applaud the requirement to introduce a proper structure in firms to help employees raise matters of concern direct to senior management.”
Simon Culhane added, “The CISI particularly welcomes the appointment of a NED as the whistleblower’s champion because it needs someone at a senior level to ensure matters raised can easily be brought to the board’s attention.”
The CISI supports the FCA in not offering cash payments for whistleblowers. Instead it suggests the creation of a “protection fund, which would pay a whistleblower’s salary if he or she lost their job because they spoke up, for up to six months or, if shorter, the time it took for the individual’s case to be resolved at an employment tribunal.”
The CISI praises the FCA for not making it a regulatory requirement to blow the whistle because the whole aim is for the firm to create a culture where people can feel comfortable at speaking up first, and only later consider whistleblowing to the regulator.
However, the CISI finds it odd that this significant cultural change is only going to apply to a narrow base composed of UK based banks with assets greater than £250m. It is a struggle to understand why the size of the asset base or the legal nationality of the bank should determine whether firms have a whistleblowing policy. Either it’s a good idea or it isn’t. Why doesn’t the same principle apply to all firms regulated by the FCA?
The CISI also has concerns that individuals who blow the whistle about an issue which is not currently classed as a protected disclosure under the UK Public Interest Disclosure Act may find themselves without the protection of the law. The FCA has stated that they “judge the benefits [of this approach] outweigh the risks.”
Indeed, risks to the firm may be minimal. But the risks to the individuals who speak up about an issue and find themselves without legal protection may be devastating.
“Overall,” says Simon Culhane, “this is a good start, but it’s only half finished.”
Read more about whistleblowing from p. 17 in our 2015 Professional Body Sector Review, with views from CISI and the Chartered Insurance Institute.