Whistleblowing in financial services – just one more hurdle or a vital series of checks and balances?
by Heat Recruitment
By Alex Russon
Whistleblowing is a topic at the forefront of the national conversation – particularly around financial institutions. In May of this year, Barclays chief Jes Staley avoided a ban from the Financial Conduct Authority (FCA) but was fined £640,000 for trying to uncover the identity of an anonymous whistleblower. Staley successfully became the first CEO of a major financial institution to “be fined by the financial regulators and keep his job.”
Mary Inman, a lawyer at a law firm which represents whistleblowers, expressed disappointment with the FCA. She advised that “This is simply bus money for Jes Staley and sends entirely the wrong message … The takeaway for other bankers is that you can try to unmask a whistleblower and just get a slap on the wrist and keep your job. It’s tone-deaf of the FCA, particularly at a time of profound societal change through people speaking up.”
Today, whistleblowing in the financial services market is dropping significantly. According to FCA figures, 119 whistleblowing disclosures were received from financial advisers – a 30% decrease on 2015/16 figures… which was itself a 37% drop on figures from 2014/15. Despite this, these figures still dwarf disclosures for 2007/08, which totalled just 138.
The drop, according to some industry professionals, coincides with rules established in October 2015 (and implemented in September 2016) to make the whistleblowing process easier.
The rules from the FCA “are designed to build on and formalise examples of good practice already found in parts of the financial services industry and aim to encourage a culture in which individuals working in the industry feel comfortable raising concerns and challenge poor practice and behaviour.”
One solution proffered was to introduce incentives for ‘tipsters’. One case in the US saw a worker receive $33m for their disclosure in a Securities and Exchange Commission case involving their employer. The preferred solution, naturally, would be a more robust culture.
According to the release from the FCA: “Individuals working for financial institutions may be reluctant to speak out about wrongdoing for fear of suffering personally as a consequence. Mechanisms within firms to encourage people to voice concerns – by, for example, offering confidentiality to those speaking up – can provide comfort to whistleblowers.”
In asset and wealth management, just 21 cases were disclosed.
Despite the FCA championing the whistleblowing cause, it would appear there is still tension in companies where activities are required to be disclosed. There is, however, a sense of uncertainty. A drop in the number of whistleblowing cases could point to one of two things. Either the FCA has done its job admirably and corporate culture has improved dramatically… or the exact opposite is true.
For the Wealth Management industry, whistleblowing is, and has to be seen as, a series of checks and balances.
Company culture is a topic we speak about regularly at Heat Recruitment. It’s a vital tool to boost employer branding and encourage staff to work for your firm. What it’s not, is some intangible benefit for staff already in businesses. In short, it promotes effective communication, collaboration and workplace safety, while reducing risk factors and instances of workplace bullying.
Whistleblowing needs to be seen as an extension of that company culture – an outlet for employees to use should less than savoury actions occur.
At Heat Recruitment, we’re experts in the financial services sector. If you’re a wealth management specialist looking for the next step in your career, or are an employer looking for your next hire, get in touch with us today.