Exposing Bad Practice in Financial Services – Are New Whistleblowing Regulations Working towards Encouraging a Culture of “Speaking up”?

by NAVEX Global

NAVEX Global

September 2016 saw the enforcement of new rules by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) that aimed at increasing confidence amongst financial services employees and encouraging them to speak up against perceived misconduct and wrongdoing within the workplace. Prior to these guidelines coming into effect, willingness to ‘blow the whistle’ in UK firms was distorted by a significant fear of retaliation from senior employees, victimisation or even dismissal. As a result, the incidence of whistleblowing across UK and EMEA has historically been low.

65 percent [of firms] have taken advantage of the new legislation in order to implement additional whistleblowing measures

Since then, attitudes towards whistleblowing have begun to change, particularly in the approach taken by C-level executives, in a move that has seen firms actively building on their existing measures in order to encourage employees to voice their concerns. A recent survey conducted by NAVEX Global found that whilst 94 percent of participating firms already had whistleblowing measures in place prior to the introduction of the FCA’s regulations, 65 percent have taken advantage of the new legislation in order to implement additional whistleblowing measures that go beyond the requirements stipulated by the FCA. It is evident that senior employees across the industry acknowledge the value that comes from workers raising the red flag about workplace issues, understanding that to avoid a crisis, it is imperative that employees and their seniors work together to identify and address ethics and compliance matters at an early stage.

Download Report: UK Financial Services Whistleblowing Regulation Survey

The improvement of whistleblowing programmes across financial services firms in the UK is widely regarded as an important move towards the development of an ethical organisational culture. Indeed, the sector which has previously seen whistleblowers pushed out for raising the alarm is now showing real signs of encouraging speaking up, including companies being given immunity for alerting authorities to bad practice. A notable example relates to RBS, which was pardoned of €115 million of fines in October 2015 for alerting the European Commission’s competition watchdog of two instances of attempted price fixing in relation to Swiss franc interest rates.

Our UK whistleblowing survey highlights that a significant proportion of board members and employees (52 percent and 47 percent respectively) perceive the primary importance of whistleblowing programmes as a necessary step towards moral organisational behaviour and sustainability. It is clear that there is a strong belief that the feedback and concerns of employees must form the basis for an organisational culture built upon openness and confidence to speak out when necessary. This widespread understanding is an important – and pleasing – result that has emerged from the survey. It is clear that a focus on fostering trust in organisations resonates as strongly with employers as it does with their staff, especially when it comes to maximising performance and opportunities. However, whilst greater trust should result in a greater instance of whistleblowing reports by employees, this assumption has not yet translated into a significant improvement.

Despite the extensive implementation of new legislation across the sector, only three percent of surveyed firms have witnessed an increase in whistleblowing reports, with 46 percent reporting that the rules have had minimal or no impact.

The culture assessment work we undertake for our clients shows this as indicative of the time and effort required to develop and maintain a strong organisational culture. Our report suggests that ‘speaking up’ will only become more ingrained when whistleblowing policies are implemented alongside a wider ethics and compliance programme. It also demonstrates that, to create a basis for whistleblowing and a strong ‘speak-up’ culture, whistleblowing measures across any industry sector must ensure that:

  • Employees are regularly made aware of how they can report and why it is important to do so.
  • The system must protect the confidentiality of the whistleblower and every report is investigated and acted upon consistently and appropriately.
  • Retaliation will not be tolerated in any form.

Download our UK Financial Services Whistleblowing Regulation Survey to see the full results and recommendations.

View original article at Ethics & Compliance MattersTM

Written by:

NAVEX Global

NAVEX Global on:

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