Fostering a workplace culture that encourages and empowers employees to report wrongdoing can serve as an essential tool in ensuring compliance with regulatory standards.
Whistleblowers play a crucial role in identifying risks early on, thus enabling firms to proactively address concerns before they escalate into serious misconduct.
Under the FCA’s existing whistleblowing rules, regulated firms are expected to have robust measures in place for employees wishing to raise internal concerns.
However, as indicated by Bloomsbury’s findings, a firm’s workplace culture and poorly communicated whistleblowing policy can often act as barriers to reporting.
It is essential for firms to recognise that those who blow the whistle on misconduct are acting in the best interests of the wider firm, often seeking to preserve its integrity. Therefore, developing a comprehensive strategy to foster a supportive whistleblowing culture is essential.
Such a strategy should align with the existing FCA rules, and may include the following practical measures:
- The appointment of a designated whistleblowing champion to oversee the whistleblowing processes, and ensure that concerns are managed promptly and in compliance with FCA guidelines.
- The implementation of clear and well-communicated policies that outline the procedure for reporting concerns, and the subsequent investigative procedures.
- The creation of accessible and anonymised reporting mechanisms to lessen the fear regarding whistleblowing.
- The establishment of robust policies to address incidents of victimisation or incivility stemming from whistleblowing complaints, including a clear outline of the appropriate disciplinary measures for breaches.
- Signposting employees to relevant internal and external support services, including mental health and wellbeing resources, for those who are affected by the disclosure process.
- Provide ongoing training to reinforce the importance of reporting concerns, and ensuring employees are aware of their rights and the safeguards available to them.
It is clear that there is much progress to be made in enhancing whistleblowing culture in the UK. By implementing the measures outlined above, and taking a serious approach to internal reports, firms can instil confidence in employees to report issues at an early stage.
When employees feel secure in raising concerns internally, firms can more effectively mitigate risks and address concerns before they escalate into serious misconduct.
This proactive approach minimises the risk of being involved in a public investigation and therefore protects the firm from the reputational damage that follows.
Looking ahead
Striking a balance between promoting transparency and managing reputational risk is a challenging task.
While valid concerns have been raised regarding the enhanced enforcement approach, the FCA has indicated that careful consideration will be taken when determining whether an investigation should be publicised under the public interest test.
The regulator has indicated plans to publish a case study outlining the criteria that will be applied, and how these will work in practice.
Firms should be prepared to reinforce their existing misconduct and whistleblowing procedures in light of these recent developments.
By actively promoting a culture of transparency and accountability, firms can encourage the early reporting of misconduct and ultimately enhance their compliance with regulatory standards.
As the FCA prepares to implement its new strategy, firms that go out of their way to prioritise supporting whistleblowers and implementing robust internal reporting mechanisms will be better positioned to tackle the evolving regulatory changes, while also safeguarding their reputations.
