No Financial Incentives for Whistleblowers in the UK

by Dechert LLP

The Financial Conduct Authority (FCA) and the Bank of England Prudential Regulation Authority (PRA) published a report on 30 July 2014 that recommends that no financial incentives are given to whistleblowers. This differs from the position in the US where the SEC is authorised to give whistleblowers financial awards of between 10% - 30% of settlements that exceed US$1 million.


The Parliamentary Committee on Banking Standards (PCBS) was appointed to conduct an enquiry into professional standards and the culture in the banking sector. The PCBS published a report in June 2013 which expressed shock at the fact that many people turned a blind eye to misconduct and failed to report it. The PCBS called on the FCA to undertake research into the impact of financial incentives in the US.

In October 2013, the FCA accepted the PCBS recommendations that senior management should be responsible for ensuring that their firms have effective mechanisms in place for employees who raise concerns and should ensure that there are safeguards for whistleblowers.

The July 2014 report

In their July report, the FCA and the PRA agree with the PCBS that strong measures are needed to encourage and protect whistleblowers, that there should be a better culture in financial services firms to improve behaviour and that senior management accountability for whistleblowing should be improved.

However, the report recommends that no financial incentives are given to whistleblowers as:

  • Incentives in the US only benefit a small number of people who provide information which leads to successful enforcement action resulting in monetary sanctions.
  • There is no empirical evidence that incentives lead to an increase in the number or quality of the disclosures received.
  • Introducing incentives has led to a complex and therefore costly governance structure.
  • The incentives system in the US has generated significant legal fees for both whistleblowers and firms.
  • Incentives could undermine the establishment and maintenance of effective whistleblowing mechanisms.

The FCA and PRA are also concerned that providing financial incentives could create a number of moral or other hazards. Amongst others, these include (i) malicious reporting by opportunists and uninformed parties which pass on rumours or public information; (ii) the potential entrapment of market participants; (iii) the fact that a court may call into question the reliability of a whistleblower’s evidence; (iv) the fact that large monetary payouts are contrary to policy norms in the UK; and (v) paying significant awards to well paid individuals to fulfil a public duty could reinforce perceptions that the financial sector is at odds with the rest of society.

Next steps

In June 2014, the UK Government stated its intention to change cultural attitudes to whistleblowing. It also indicated that it will create a model whistleblowing policy which can be adopted by businesses by the end of 2014.

The FCA and PRA have said that they will publish (i) annual reports about whistleblowing disclosures received and any action taken; and (ii) proposals on how to improve whistleblowing regimes within firms.

Regardless of how the landscape develops, businesses should ensure that they have effective mechanisms in place for whistleblowers and protect whistleblowers who raise concerns.

It is also important for businesses to deal with any whistleblower reports appropriately and the following will need to be considered:

  • The investigation into allegations made by the whistleblower should be carried out promptly.
  • Businesses will need to consider how to scope the investigation.
  • The investigation should be kept confidential and as few people as possible should be involved.
  • Businesses will need to consider whether it is appropriate for the investigation to be carried out internally or whether it should be outsourced to external lawyers.
  • It will be necessary to assess whether there should be a review of electronic data (emails, documents etc.) and if so, businesses need to ensure compliance with local data protection laws.

Businesses should also be aware that there are many other avenues for regulators and prosecutors to obtain information of suspected wrongdoing even if no whistleblowers come forward.

Written by:

Dechert LLP

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.