Recruitment review

What does whistleblowing really mean?

Pete Gwilliam

owner, Virtus Search

Many readers of this article will have seen something that concerns them at work but may not be sure how or whether they should report it. The chain of command often defers to approaching your line manager or supervisor. But what if you can’t raise your concerns with them? Maybe they are involved in the wrongdoing, or you don’t trust them to act properly because they are connected to the perpetrator. Effective whistleblowing arrangements are a key part of good governance. A healthy culture is one in which people are encouraged to speak out – confident that they can do so without adverse repercussions, confident that they will be listened to, and confident that appropriate action will be taken.

Culture and governance remain a key priority for the Financial Conduct Authority (FCA), and its whistleblowing rules require firms to have effective arrangements in place for employees who want to raise concerns, and to guarantee these concerns will be handled appropriately and confidentially. The FCA requires each firm to appoint a whistleblowers’ champion to make sure there is senior management oversight of the integrity, independence, and effectiveness of a firm’s arrangements. This includes those arrangements designed to protect whistleblowers from victimisation. Your own firm’s whistleblowing policy (aka a ‘speak up’ policy or a ‘raising concerns’ policy) will give you an idea of how to blow the whistle within your organisation.

The FCA campaign of 2021, “In confidence, with confidence,” encouraged individuals working in financial services to report to the FCA potential wrongdoing such as misselling, not treating customers fairly, money laundering, or failing systems and controls.

But to drive inclusivity, whistleblowing policies must ensure that behaviours that don’t necessarily cause financial wrongdoing can also be called out and investigated confidentially and sensitively. In recognition of the importance of an equitable and inclusive culture, and of fitness and propriety standards, the FCA have expanded their remit to include not only industry-specific wrongdoing, but also workplace culture. For example, concerns about the failure of organisations to tackle complaints of sexual harassment can be indicative of wider organisational and cultural issues and will be of interest to the regulator.

At the launch of the HM Treasury Women in Finance Charter Annual Review on 17 March 2021, Nikhil Rathi, CEO of the FCA, spoke about “conduct questions to help focus minds of senior managers on conduct risk. I would like to see this expanded – and a sixth [question] added – for all firms: Is your management team diverse enough to provide adequate challenge, and do you create the right environment in which people of all backgrounds can speak up?”

The Public Interest Disclosure Act 1998, which came into force in 1999, is underpinned by the premise that whistleblowers will come forward provided they are protected properly from retaliation by their employer. Accordingly, the act provides statutory protection against victimization or dismissal to workers reporting malpractice by their employers or third parties. The dismissal of an employee or employee shareholder will be automatically unfair if the reason, or principal reason, for their dismissal is that the person has made a “protected disclosure.”

The act also protects workers from being subjected to any detriment on the ground that they have made a disclosure, and ultimately a claimant who has been dismissed or suffered a detriment because they made a such a disclosure is entitled to compensation, which is uncapped. (The compensation is based on financial loss, and employment tribunals have been willing to make substantial compensatory awards in respect of lost future earnings on the basis that whistleblowers may not be able to recommence their careers in their industries or at similar levels of compensation because their actions and the resulting publicity have resulted in them being viewed as “toxic” in the job market.)

The sense of risk people feel when speaking up will hopefully be reduced by building a psychologically safe environment, because only by raising concerns will we see improvements, and there is a genuine need for firms to ensure their whistleblowing policies and programmes are effectively communicated, accessible, and handled correctly.

So next time you see behaviour that you don’t think appropriate, do remember that whilst the term “whistleblowing” can bring negative thoughts of accusations and criminal activity, in fact it is about safeguarding your employees/colleagues, your customers, and your organisation. It’s also about supporting employees from all backgrounds and at all levels of an organisation so that they will feel comfortable expressing their opinions – and, crucially, will be listened to when they do. It’s vital to employees, investors, customers, and stakeholders alike. M I