This report sets out the findings of a qualitative assessment survey of a small sample of recent whistleblowers who disclosed their concerns about wrongdoing to us. The survey was conducted in early 2022 to understand whistleblowers’ experience of reporting to the FCA and to capture a range of views about their experience.
The FCA’s dedicated Whistleblowing team receives whistleblowing reports and the information that whistleblowers give us is used across the organisation to inform our work. Before we set out our findings, we explain the main features of the FCA’s approach to whistleblowing. We then explain our response and our plans to improve our cross-FCA whistleblowing function.
These initiatives include:
- providing whistleblowers with a fuller picture of our actions, reasons for these actions, and the outcome when we close their case
- engaging with the Department for Business and Trade to support a review of whistleblower legislation in the interests of enhancing the wider whistleblowing system
- reviewing how best to engage with whistleblowers, including through our webpages, and how we use whistleblowers’ information across the FCA
- improving the training we give our Whistleblowing Team
- improving our webform to ensure we capture fully a whistleblower’s disclosure
1. Blowing the whistle to the FCA
We already go beyond the requirements of UK whistleblowing-related law in important ways to engage with whistleblowers and support whistleblowing in financial services:
- We have a dedicated Whistleblowing team focused on engaging with whistleblowers. They ensure disclosures are captured and then directed to the right part of the FCA for assessment and consideration of further action. A key part of the team’s role is to tell the whistleblower how we will treat their information and what confidentiality means.
- We offer every whistleblower an opportunity to speak to us face to face (or virtually).
- We assess every report made to us, with decisions on action taken according to the content of the disclosure and other information available to us.
- Where whistleblowers request it and we can contact them, we provide feedback on the outcome of their report.
- We accept disclosures from individuals with a demonstrable need for the confidentiality that our whistleblowing processes provide, as well as from ‘workers’ or ‘former workers’ protected by the Public Interest Disclosure Act (PIDA).
- We actively engaged potential whistleblowers with a campaign - In confidence, with confidence - in 2021 to increase awareness of and confidence in our whistleblowing function.
- We have implemented rules and guidance for the firms we regulate on their internal whistleblowing arrangements.
The survey provides us with very helpful insights, especially the finding that just over half the surveyed whistleblowers would continue to engage with us despite dissatisfaction with our feedback to them. The FCA has considered in detail the response we have received on feedback. We recognise that it is difficult for whistleblowers to see they are being taken seriously and listened to if they do not receive fuller feedback on what we have done with the concerns they have raised with us. We are determined to address this perception given the value we place on whistleblowers.
A significant constraint on the feedback we have been providing whistleblowers is the obligation we have to comply with section 348 of the Financial Services & Markets Act 2000. Section 348 requires us to keep information that we obtain during our functions and duties confidential and it includes information we obtain from firms when we are acting on the basis of whistleblowing intelligence.
The results of this survey, especially the concerns raised about the limited feedback we have provided, have caused us to reconsider whether we are able to provide further feedback to whistleblowers consistent with our confidentiality obligations under section 348 where it is necessary to ensure whistleblowers have confidence in us and to better enable us to carry out our statutory functions.
We think the survey provides us with the foundation to provide further feedback to whistleblowers when cases are closed, which will include more detail about steps we have taken or reasons for taking or not taking action, as well as information about the outcome. We will also publish more general guidance on the types of steps we do take in response to whistleblowing. This will improve confidence in us as an agency receiving intelligence from whistleblowers which, in turn, will help us better carry out our statutory functions and duties.
We also note that the Department for Business and Trade intends in the coming months to review the law in relation to whistleblower protections. The FCA will make a full contribution to this review to support the enhancement of the wider whistleblowing framework, drawing on the findings of this survey.
2. The value we place on whistleblowers
A key reason for our wide-ranging approach to whistleblowing is the value we place on the information that whistleblowers provide. They give us unique insight into the sectors and firms we regulate, helping us to stop, reduce and prevent harm. Reports can lead to us taking action against a firm or individual and help inform our supervisory and enforcement strategies. In many cases intelligence from whistleblowers permits us to engage with firms early to prevent harm to consumers taking place, often by remediating gaps in systems and controls.
Our Annual Report 2021/22 shows that between April 2021 and March 2022 we received and assessed 1,041 whistleblower reports with 2,114 separate allegations.
Typically, these reports contain allegations that relate to the following matters:
- the fitness and propriety of approved persons
- treating customers fairly
- breaches of the Financial Services and Markets Act 2000
- cultural concerns within firms
- compliance failings
- fraud
- systems and controls failings within firms
- unauthorised business
- non-compliance with the FCA’s rules on firms’ internal whistleblowing arrangements
- data security breaches
Numbers of disclosures have been broadly consistent over the last few years (2020-21: 1,046; 2019-20: 1,153), with the pandemic making no discernible impact on reporting levels.
Since January 2022, approximately one third of all the cases we have received, reviewed and then closed led to us taking action. Action can range from enforcement action, a s166 Skilled Persons Review, restricting a firm’s permissions or an individual’s authorisation, to actions such as writing to or visiting a firm, asking it for information, or asking it to attest to complying with our rules.
3. Challenges
Handling intelligence from whistleblowers can present difficulties. - which is why we have an expertly trained whistleblowing team in place to help us manage those difficulties. Some of the difficulties that can arise include:
- It can take some time for us and/or the firm to resolve and reach a determination in each case. We need to obtain information from the firm without revealing the identity of the whistleblower or that the inquiry has been prompted by a whistleblower. This is especially challenging where the whistleblower is still employed by the firm or involved in the business area or process that is the subject of the enquiry. We sometimes have to use ‘indirect’ strategies so that we can follow up intelligence from whistleblowers with the firm. Where we require a firm to take action, we do not close a whistleblowing case until we are satisfied that all the steps to complete the action have been taken by the firm. Often this will give the appearance of delay, when in fact the case remains open because the firm is undertaking steps to address the issue that has been raised and those steps remain incomplete. If there are broader changes that we believe that a firm needs to take, such as changes to IT systems, then the case can remain open for significant periods of time.
- Although we offer whistleblowers the opportunity to speak to us face to face or virtually, most do not take up this offer. Around a third choose also to remain anonymous.
- Some whistleblowers will only be able to see aspects of the suspected or alleged wrongdoing taking place in a firm and their disclosure will, for this reason, only give us part of the picture. Others do not or cannot provide further information to illuminate the issue they are reporting. All these factors can make it more time-consuming or challenging to follow up effectively with the firm.
- Not all whistleblowing allegations require intervention by the FCA. We appreciate that this can be difficult for whistleblowers, especially those who also involved in employment disputes. We cannot mediate or arbitrate employment disputes.
- Whistleblowers are often, and for good reason, keen to understand how we have acted on their information. When we review a whistleblower’s disclosure, we consider it alongside other available information and, where required, request further information from the firm, other regulators or agencies in order to decide on appropriate next steps. When we provide feedback to whistleblowers, we are restricted by the legal restraints on our onward disclosure of confidential information. We must balance the confidentiality of the firm and others with the integrity of any investigation we undertake.
We know from our survey that whistleblowers are not satisfied with the level of information that they are provided on the steps that we take. We are committed to improving our feedback to whistleblowers when cases are closed, which will include more detail about steps we have taken or reasons for taking or not taking action, as well as information about the outcome. We will also publish more general guidance on the types of steps we do take in response to whistleblowing.
4. The survey sample
Our Whistleblowing team wrote to a variety of individuals who had made a whistleblowing report to us in 2021-2022 and had interactions with different members of the Whistleblowing team. We were also careful to assure participants that they would not be identified in any subsequent report. We then selected a sample of 68 whistleblowers who had engaged with different Whistleblowing team members to take part in the survey.
Our sample comprised whistleblowers who:
- had made both simple and complex disclosures
- should have received regular progress updates from the Whistleblowing Team
- may have been aware of our 2021 ’In confidence, with confidence’ campaign
Overall we received 21 fully completed survey responses between January 13-31, 2022. This is a 31% response rate. A further 3 whistleblowers responded to some of the questions. It was felt that these respondents supplied sufficiently varied accounts of their experience to meet the aims of this research.
We asked participants whether they would be willing to provide further feedback about their experience in a follow-up telephone conversation. We have included relevant additional responses from these follow-up conversations throughout this report.
Survey Questions
The survey was conducted online. The questionnaire involved 25 questions, focusing on the key contact points with us.
5. Our findings
5.1. Visits to our Whistleblowing webpages
Nearly all the respondents (19 of 21) had visited our Whistleblowing webpages before contacting the Whistleblowing Team.
Just over two-thirds of these respondents (13 of 19) said that they had found the webpages useful.
Respondents’ suggestions for website improvements included:
- examples of the typical subject matter of the whistleblowing reports we receive
- timelines and escalation points for investigating reports
5.2. Reasons for reporting to us
We asked respondents why they decided to contact the FCA’s Whistleblowing team:
Table 1: Reasons for reporting to the FCA
|
Reasons for reporting to the FCA* |
Number of respondents selecting this reason:
|
|---|---|
|
I made an internal complaint which was ignored. |
13 |
|
I made the report as a former worker of a firm and could not use another channel. |
8 |
|
I was making a report about a firm or individual that I have a personal connection to, but no working relationship. |
5 |
|
I saw the FCA whistleblowing campaign: 'In confidence, with confidence' |
4 |
|
I didn't feel comfortable making an internal complaint. |
3 |
|
There was no internal channel for me to bring my concerns to my employer's attention confidentially. |
3 |
|
The issue was brought to my attention by someone else who was not able to make a complaint. |
1 |
*Respondents could select more than one reason when answering this question.
The findings suggests that respondents came to the FCA as a ‘listener of last resort’, where they did not feel they could raise their concerns at work or that their firm had addressed their concerns.
FCA whistleblowing in practice: Example 1
A whistleblower recently reported concerns that a small Appointed Representative firm mis-sold loans and was not treating customers fairly.
Our Supervision team reviewed the firm’s website and confirmed that the APR information it gave was contradictory. To protect consumers, we instructed the firm to publish the correct APR information on its website immediately.
At the same time, we also directed the firm to our new consultation paper on the AR regime, to educate it on our expectations of these firms.
5.3. Listening and exploring the issues with whistleblowers
Respondents were asked to rate their satisfaction with the FCA Whistleblowing team in 2 key aspects:
• Were they listened to?
• Were the issues in their report explored?
Respondents reported dissatisfaction with both aspects, as seen in the figures below.
Chart
Data table
Survey respondents were asked if they were satisfied that we explored the issues that they wished to report with them. Again, respondents reported dissatisfaction:
Chart
Data table
We asked dissatisfied respondents why they were not satisfied.
Their substantive responses suggested they:
• did not feel that there had been enough dialogue with them to ensure that their concerns had been understood
• perceived that we were reluctant to act and that this reluctance was preventing us from thoroughly investigating reports
How we are responding
We know that many whistleblowers choose to make an initial report online. So, we are improving our webform to ensure that we capture as much relevant information as possible in the first instance. This will improve the quality of the intelligence our assessing teams receive and review, so enabling decisions about possible action.
We recognise that it is much more effective for us to develop disclosures with whistleblowers who provide contact details and with whom we can have a dialogue. However, not every whistleblower will want to provide contact details. In the absence of contact details the quality of our initial engagement with the whistleblower is critical, and the webform is key to this.
We are strengthening the training of our Whistleblowing team to improve our initial conversations with whistleblowers so we get to the heart of their concerns and to ensure that when whistleblowers are reporting to us in stressful circumstances, we are able to recognise this and respond appropriately.
5.4. Explaining what we can offer whistleblowers
We asked whistleblowers about the Whistleblowing team’s initial explanation of the process involved in taking forward their disclosure.
Table 2: The Whistleblowing team’s initial explanation on the process
|
How well were the following explained: |
Not well |
Moderately well |
Very well |
Extremely well |
|---|---|---|---|---|
|
The role of the FCA Whistleblowing Team. |
8 |
6 |
5 |
2 |
|
How your report would progress within the FCA.* |
9 |
4 |
4 |
2 |
|
How your identity would be kept confidential within the FCA. |
1 |
7 |
6 |
7 |
* Two respondents did not answer this question
The findings suggest that respondents:
- were satisfied with our initial communication
- believed that they understood the role of the Whistleblowing Team and how they would progress the whistleblowing report
- understood that we would keep their identity confidential
FCA whistleblowing in practice: Example 2
We received a report from a whistleblower that a foreign exchange firm applying for FCA Authorisation was already aggressively taking on UK customers, against our rules.
Our Authorisations Department considered this information in the context of the firm’s application. We raised our concerns with the firm, prompting the firm to withdraw its application, reducing the risk of potential harm to consumers.
5.5. Keeping whistleblowers updated
When whistleblowers report to us, we offer to keep them updated. 17 respondents told us that they had taken the opportunity to be kept informed when we reviewed their disclosures. They were asked how reassuring they found these progress updates. In the main the respondents said that they were not reassured.
Chart
Data table
Respondents told us that the updates ‘lacked substance’, ‘no real information was given’ and ‘didn’t say if the FCA was investigating or not’.
Their suggestions for improvements included being given more information about the progress of the FCA’s review and the action we are taking.
Finding: whistleblowers did not feel there was enough dialogue with us to enable proper investigation of their concerns
How we are responding
We are improving our processes to ensure that the teams outside the Whistleblowing Team who are assessing disclosures submit any follow-up questions for the whistleblower as early as possible. Where the assessing teams conclude that the FCA cannot progress the whistleblower’s disclosure, we will aim to tell the whistleblower earlier, and therefore manage their expectations better.
5.6. Final outcome of the FCA review
For those respondents who had received the final outcome of the FCA review, we asked whether it had met their expectations.
Chart
Data table
Eight of the 9 individuals who had received final feedback were dissatisfied with the outcome they had received. 12 individuals had not yet received final feedback.
Respondents reported that they were not reassured that their concerns had been properly investigated and had expected a final report detailing the action taken.
Some respondents said that they did not understand how we had used their information. They told us that they felt that their concerns had been ‘brushed aside’, there was ‘no explanation, no opportunity to discuss’ and that they felt there was a ‘failure to investigate properly and take appropriate actions’. Further there were ‘no real consequences’ for wrongdoers.
FCA whistleblowing in practice: Example 3
We received several whistleblower reports about failings in a firm’s internal ‘Speak Up’ (whistleblowing) function. Our Supervision team were concerned that internal whistleblowers at the firm were being deterred from reporting because of these failings. To address this, we set the firm a programme of remedial action to improve its 'Speak Up' function, leading to root and branch reforms of its governance, structure and leadership. We continue to monitor the performance of this function as part of our day-to-day supervision of the firm.
5.7. Overall satisfaction
We asked respondents to tell us how satisfied they were with the FCA’s handling of their report. Respondents reported significant dissatisfaction with their experience of whistleblowing to the FCA.
Chart
Data table
When asked, respondents repeated that they did not believe the FCA had investigated their concerns properly or taken appropriate action. They told us that the FCA was ‘not really interested’ and had ‘failed to take allegations of serious wrongdoing seriously’. Further, ‘no investigation was done’ by the FCA, which was ‘institutionally biased against action’.
How we are responding
We consider there is a direct connection between whistleblowers believing we have not acted on their information and the limited feedback we have been able to provide to them. The survey findings have provided us with a strong foundation on which to reconsider our feedback to whistleblowers. In response to the findings, we are seeking to ensure that our final feedback sets out as much detail as is necessary, according to the circumstances, about the FCA’s review or actions and the outcome of any action.
Expectations of the process and feedback are important in this context. Whistleblowers felt that our webpages could offer more information about what they could expect. We took steps throughout 2021 and 2022 to improve the volume and quality of information we publish about whistleblowing on these pages. We will review them to ensure that we explain fully the whistleblower journey, highlight anonymised examples and continually seek ways to make them more helpful and engaging.
5.8. The returning whistleblower
However, when asked if they would make a further disclosure to the FCA if they encountered wrongdoing in the future, many respondents said that they would do so.
Chart
Data table
The reasons given by the other respondents for ruling out another report to the FCA included a ‘failure to engage’, ‘no idea what has been done’, ‘no report of the outcome’, ‘no actions were undertaken by the FCA’, and ‘it was not investigated properly’. Again, these responses indicate respondents’ view that the FCA had failed to act.
5.9. Summary
Making a report
Respondents saw the FCA as ‘the listener of last resort’, where they felt unable to report their concerns to their employer or that their employer had not addressed their concerns.
Around half of the respondents would report to the FCA again in the future.
Respondents did not feel understood by us when they made their report.
Updates
Respondents were unsatisfied with our updates because they felt that they lacked information.
The final outcome
Respondents said that the FCA should have acted because, in their view, they had provided clear evidence of misconduct.
Some respondents believed that we were reluctant to act.
Others said that the review 'was taking ages to conclude'.
6. Next steps
We are disappointed to see the dissatisfaction expressed by many survey respondents. Whistleblowers are key stakeholders in our efforts to reduce harm and we greatly value their contribution.
The survey findings, whilst from a limited sample, give us a valuable opportunity to continue to develop our approach to whistleblowing.
In doing so, we will continue to:
- assess every disclosure made by a whistleblower on its merits
- ensure that whistleblowers’ disclosures are exploited fully and actions are taken and closed with whistleblower protection at the forefront (acknowledging that it can take some time to achieve this, particularly when disclosures are part of a wider or complex matter)
As mentioned above, we will also improve the feedback we provide to whistleblowers when we give them final feedback. This will include the steps we have taken or reasons for taking or not taking action, as well as information about the outcome.
We will also ensure that the survey results presented here are used to inform our contribution to a wider review of whistleblower legislation that the Department of Business and Trade will undertake in the coming months.
Ongoing surveys
The qualitative assessment survey we undertook in early 2022 provided a single snapshot of the views of a sample of whistleblowers. To monitor whistleblower views on an ongoing basis, we will survey all whistleblowers when we close their case. Whistleblower views will inform our programme of continuous improvement.
What we do with whistleblowers’ information
What happens after a whistleblower reports to the Whistleblowing team
When whistleblowers report to the Whistleblowing team, the team creates a case for review by supervisors or other relevant FCA staff (e.g. in Enforcement). Between April 2021 and March 2022, the team directed c. 85% of whistleblowing cases to Supervision teams on receipt. When whistleblowers have given their contact details, the Whistleblowing Team routinely engages with them, providing an opportunity to develop their information. Such engagement can be in person or virtual.
What actions we can take
The FCA’s work on whistleblowing cases will not always lead to a public disclosure and much of it is conducted through general supervision.
The actions we can take include requesting firms’ processes and procedures for the purposes of a desk-based review; firm visits and discussions; setting out required actions of a specific Senior Management Function; a s166 (Skilled Persons) review; removal of or changes to a firm’s permission or an individual’s approval; or Enforcement action, depending on the seriousness of the findings from the work undertaken.
All disclosures are reviewed by the appropriate teams. Sometimes we are unable to act directly on, or in immediate response to, a whistleblowing case, e.g. when there is insufficient information, or our review confirms that no regulatory issues have been identified. In the year April 2021 – March 2022, this applied to 60% of the cases we closed.
Such cases are nevertheless a valuable source of intelligence and are used to inform our understanding of a firm, sector or industry behaviour more generally. They can also inform future actions when considered alongside new, additional information. We take steps to ensure whistleblowing reports entered into our intelligence systems are ‘sanitised’ to protect the presence and identity of the whistleblower Since January 2021, we have added over 3,000 ‘sanitised’ whistleblowing reports to our intelligence systems.
How long it takes us to review a whistleblower’s disclosure
Whistleblowing information can sometimes be part of a bigger issue or investigation. It will often necessitate an indirect investigative approach to protect the identity or presence of a whistleblower. Both factors can slow the process of reviewing a disclosure. On average, whistleblowing cases managed by our supervisory teams that we closed in the year April 2021 – March 2022 took 12.25 months to complete. Where whistleblowers have requested updates on the progress of their case, our Whistleblowing Team will remain in touch with them while our review is ongoing.
What action we took between 2021 and 2022
As we set out in our Annual Report and Accounts 2021/22, we received 1,041 whistleblowing disclosures between April 2021 and March 2022. On 20 April 2022, these 1,041 reports had led to:
- significant action to manage harm in three cases – this may include enforcement action, a s166, or restricting a firm’s or individual’s permissions
- action to reduce harm in 96 cases – this may include writing to or visiting a firm, asking it for information, or asking it to attest to complying with our rules
- 99 cases informing our work, including harm prevention, but no direct action
On 20 April 2022, 801 cases remained under assessment, which means that they were being reviewed by the relevant teams across the FCA at that point.
Since January 2022, approximately one third of the cases we have received and closed has led to action being taken.
How we work with others
When we assess that a whistleblower has information relevant to a different regulator, agency or organisation, we will either encourage the whistleblower to report to that body, or, where we are permitted to share intelligence and it is appropriate to do so, we will pass the whistleblower’s anonymised reporting to the relevant organisation. Between April 2021 and March 2022, we passed 395 whistleblowing reports to other organisations for their review and action (this does not include the Prudential Regulation Authority, with whom we routinely share whistleblower disclosures about firms regulated by both the FCA and the PRA). This included 10 to overseas regulators with whom we can share intelligence