UK FCA still assessing hundreds of whistle-blowing reports from 2019, hundreds more from 2020 -FoI response

Almost 1,000 whistle-blowing reports are still being assessed by the Financial Conduct Authority (FCA) months — and in 316 cases, years — after they were brought to its attention, a request made under the Freedom of Information Act 2000 has revealed. In its response to FOI8058, submitted by Regulatory Intelligence, the FCA said it was still assessing 316 reports from 2019 and 630, from 2020. In all, the FCA received 1,179 reports in 2019, containing 2,747 allegations. In 2020, it received 1,075 reports, containing 2,798 allegations.

As of April 20, the FCA said 41 reports received in 2019 and 13 from 2020 had led it to take significant action to mitigate harm.

"Significant action may include, but is not limited to, enforcement investigation, s166 skilled person reports or the variation/withdrawal of permissions," the FCA said in the FoI response.

Backlog

A spokeswoman for the regulator said the high number of cases still being assessed did not constitute a backlog. The FCA response to FOI8058 left several hundred more whistle-blowing reports from 2019 and 2020 unaccounted for — 686 for 2019 and 331 for 2020. A further FoI would be required to ascertain the status of these reports, she said.

The FCA says on its website that each whistle-blowing case is different, so the time taken to assess it will vary.

"Assessing and acting on whistle-blowing information can take time — it may also become part of our ongoing supervisory work with a specific firm. For these reasons, we can't be specific about how long the process will take, but typically a case will last for a few months or more," the FCA says on its website.

The FCA was forced to increase the number of staff in its whistle-blowing team from seven to 12 by the Complaints Commissioner in March 2019. The FCA said in April that the team was now 16-strong and is supported by a further two staff in supervision. The whistle-blowing team is the point of contact for individuals making reports. This team does not investigate reports, but passes them on to other parts of the regulator, the FCA said.

Mary Robinson MP (Con), chair of the All-Party Parliamentary Group for Whistleblowing, said those bringing whistle-blowing concerns to the FCA had the right to expect those reports to be handled in a timely manner.

"Whistleblowers are critical to the success of the FCA, they are informed insiders providing vital early alerts about wrongdoing across the financial services industry and they should expect their concerns to be handled in a timely and responsive way," Robinson said.

The FCA acknowledged the vital role of whistleblowers in keeping the UK's financial system healthy in its annual report.

"Whistle-blowing reports remain a vital and unique source of information for our work. They help us to better understand the behaviour of the firms we regulate, to supervise more effectively, and in our enforcement actions," the FCA said in its 2019/20 annual report.

SYSC 18

Whistleblowers often experience retaliation and discrimination when they report concerns internally, so reporting to the regulator instead can seem a safer alternative. FOI8058 revealed that the FCA received a total of 132 whistle-blowing reports categorised as being about SYSC 18 in 2019 and 2020. SYSC 18 sets out FCA requirements for firms to have an internal whistle-blowing process. These 132 complaints are, therefore, highly likely to about failure in firms' internal handling of reports from whistleblowers.

In April the FCA launched a campaign to encourage individuals to bring whistle-blowing concerns to it directly.

Delays to FCA investigating whistle-blowing concerns risk undermining confidence in the regulator, Robinson said.

"Whistleblowers need to have trust and confidence in the FCA, that the risks that they expose themselves to are not exacerbated by delay or failure to investigate," she said.

The APPG reintroduced its bill to establish an Office of the Whistleblower (OWB) in the House of Lords on May 20; the bill timed out in the previous parliamentary session. The bill would introduce hard timelines for regulators to deal with whistleblowers' reports.

"Proposals being put forward by the APPG for whistle-blowing seek to establish an OWB that will set and monitor rigorous standards for the handling of whistleblowers and their concerns," she said.

The APPG also intends that there would be consequences for regulators, including the FCA, that fail to process whistleblowers' reports within the set timeframe.

"The OWB will be the trusted safety net for all whistleblowers setting, monitoring and evaluating the management of disclosures; the APPG proposals include meaningful consequences for non-compliance," Robinson said.

Allegations

Compliance issues topped the list for whistle-blowing allegations in 2020 (525), followed by fitness and propriety concerns (384), treating customers fairly (314), and systems and controls (290).

There were 211 allegations classified by the regulator as "culture of an organisation" in 2020, down slightly from 219 in 2019.

Across 2019 and 2020 fraud, mis-selling, pressure selling, non-regulated products and unauthorised business accounted for 238, 121, 111, five and 209 allegations respectively. In March, the FCA was criticised by lawmakers for failing to listen to whistleblowers who had raised concerns about Blackmore, a failed mini-bond firm. Former High Court judge Dame Elisabeth Gloster also raised concerns about how the FCA handled tip-offs from whistleblowers in her report into a second failed mini-bond firm, London Capital & Finance.

A review ordered by the FCA board in 2019 of the regulator's treatment of whistleblowers is expected to report later this year; it has been delayed by the COVID-19 pandemic.

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