Relevant firms have until 7 March 2016 to appoint a "whistleblowers' champion", who then has until 7 September 2016 to oversee their firm's readiness for the new whistleblowing regime: this much we know. But what will this mean for HR personnel in relevant firms and what best practice lessons can HR in other financial services organisations learn from these changes?
Since the 2013 Parliamentary Commission on Banking Standards recommendations were published, the FCA has been examining ways to ensure that individuals working in financial services feel able and encouraged to speak up when they have concerns to avoid the same financial scandals of the past.
In working towards this aim, the FCA has developed a package of rules on whistleblowing "designed to build-on and formalise examples of good practice already found in the financial services industry". The policy statement and rules were announced last month, following a public consultation.
At the same time as they are encouraging openness and challenge through whistleblowing, the FCA are imposing new requirements on individuals aimed at holding them accountable for their actions. This comes in the form of the Senior Managers (or Senior Investment Managers, as applicable) and Certification Regime, and Conduct Rules, each coming into effect 7 March 2016. Whatever level of responsibility an individual in a relevant firm holds, the new whistleblowing rules will be relevant to them.
We note that, despite some umming and aahing on the topic, there is no current sign of the FCA adopting the whistleblower bounty approach of the US Securities and Exchange Commission ("SEC"); perhaps it heard that the SEC received the highest number of foreign tip-offs under the programme from the UK in Fiscal Year 2015!
The new rules will affect "relevant firms", i.e. (i) UK deposit-takers with assets of £250m or greater (including banks, building societies and credit unions), (ii) PRA-designated investment firms, and insurance and reinsurance firms within the scope of Solvency II and to the Society of Lloyd's and managing agents.
Whilst the initial rollout may be relatively small, however, the FCA has plans to consult with UK branches of overseas banks about these rules "soon", and intends to consider in due course whether or not the rules would be effective and useful in other firms regulated by the FCA, including investments firms, stockbrokers, insurance and mortgage brokers, and consumer credit firms. Given comparative past experience, this expansion seems likely and will widen the catch considerably.
In the meantime, the rules will still be non-binding guidance for other FCA regulated firms and notably they also state that firms not otherwise subject to them "may nonetheless wish to adopt the provisions…as best practice." Gauntlet thrown.
So, what does this mean for you?
The first step is clear: appoint a whistleblowers' champion. Next, breathe a sigh of relief: you do not have to call that individual "the whistleblowers' champion", if you do not want to! With that burning question answered, how do you select the right person for the job? No jousting tournaments required: the champion should be a Non-Executive Director (NED) (although firms without NEDs will not be required to appoint one just to fulfil the role) and must be a senior manager or director who is subject to the Senior Managers Regime or Senior Insurance Managers Regime.
No doubt your champion will want to know if their days will be filled with concerned employees walking into their office and making disclosures. Whilst they would be expected not to turn away individuals who come to them, this is not the role that the FCA envisages. They should have oversight of the firm's activities and approach to whistleblowing and should take overarching responsibility for the regime and the firm's accountability to the regulator.
The FCA has reassured the industry that the task of a champion is commensurate with an NED position, and so it is clear that others within the firm will share responsibility for the day to day implementation of these requirements. It is likely that some of these responsibilities will fall to HR and/or to in-house employment counsel.
The whistleblowers' champion and the firm have until 7 September 2016 to implement a package of reforms aimed at encouraging people to voice concerns.
As is so often the case, the FCA's reforms could lead to other developments that are within HR's remit, for example:
So there you have it; now, on your marks, get set…