Concerns about fitness and propriety, systems and controls, compliance and culture accounted for the highest number of whistle-blowing reports to the UK Financial Conduct Authority (FCA) in 2018. Collectively they amounted to 38.5 percent of all such reports received by the regulator, according to the response to a request under the Freedom of Information (FoI) Act 2000.
The FoI response also revealed that the FCA increased the size of its whistle-blowing team by 71 percent last year. Despite the rise in headcount, however, a UK charity dedicated to helping whistleblowers has stopped referring cases about one bank to the FCA until it has dealt with the backlog of previous reports regarding that institution.
Georgina Halford-Hall, chief executive of WhistleblowersUK, said the charity (word used by the journalist quoted; WBUK is not a charity) had put a temporary hold on referring whistleblowers from the Royal Bank of Canada (RBC) to the FCA.
"We continue to support John Banerjee [a former RBC employee who lost his job after he blew the whistle on compliance failings at the bank] in demanding answers now. It is inconceivable that the FCA have still not reached a conclusion on this matter a year after winning his [employment tribunal], which exposed that [senior managers regime] rules had been broken. The FCA have more than enough information to conclude their investigation and have done for a very long time.
"Having been told that each new [whistle-blowing case] delays the decision I have informed the FCA that WhistleblowersUK will not be referring new RBC [whistleblowers] until they release the report.
"I am concerned about the ongoing impact of the delay on other whistleblowers and potential whistleblowers at all banks," Halford-Hall said.
RBC declined to comment.
The FCA said it could not comment on whether it was or was not investigating a specific firm but denied investigations were halted when it received new allegations from whistleblowers.
“Clearly multiple whistle-blowing reports dealing with related matters may cause investigations to become wider or broader. But there is no substance to statements about related whiste-blowing reports concerning the same firm causing investigations to ‘restart’.
“Seeking to stop or prevent a whistleblower reporting misconduct directly to the FCA may be criminal offence," an FCA spokeswoman said in an emailed statement.
Overall, the regulator received 1,755 reports from whistleblowers in 2018.
The way the FCA has chosen to categorise the reports makes it hard to match them to numbers given by senior FCA staff. For instance, in December 2018 Christopher Woolard, executive director of strategy and competition at the FCA, said the regulator had received a "noticeable upturn in reports which concern discrimination and sexual harassment". Woolard said the regulator had received 64 reports on non-financial misconduct last year.
According to the response to the FoI submitted by Thomson Reuters Regulatory Intelligence (TRRI), however, the FCA received just five reports relating to sexual harassment in 2018 and the regulator does not have a category for discrimination or other non-financial misconduct. The catch-all "FSMA" (Financial Services and Markets Act 2000<http://www.complinet.com/global-rulebooks/display/rulebook.html?rbid=1072>) category received 72 reports in 2018.
The FCA received the most reports under its fitness and propriety category: 301 during 2018. Next was treating customers fairly with 246; systems and controls with 146; culture and organisation at 136; consumer detriment at 114; fraud with 109; and compliance with 107.
There were 19 reports about whistle-blowing, 14 of them landing in the third quarter of 2018.
Financial crime was broken down across nine categories: anti-money laundering (AML) had 35 reports; bribery and corruption nine; crime 14; fraud 109; insider dealing 18; market manipulation 41; money laundering concerns 28; Office for Professional Body Anti-Money Laundering Supervision (OPBAS) AML just one; and terrorist finance, six.
The FoI response revealed there were 12 full-time equivalent (FTE) staff dealing with the initial sift of whistle-blowing reports in March 2019, up from seven in 2018 and a considerable increase on the 2.5 FTE when the FCA launched in 2013.
In responding to the FoI request, the FCA stressed that the 12 staff members were just a fraction of the resource the regulator had allocated to whistle-blowing under Jane Attwood, head of the FCA's intelligence department.
"The specialist whistle-blowing team [is] dedicated to the receipt, initial assessment and dissemination within the FCA of whistle-blowing disclosures. Naturally, this team is not responsible for any supervisory inquiries or enforcement investigations that may arise from the whistle-blowing intelligence that is received by the team. Work arising from whistle-blowing is undertaken by a significant number of additional staff across the FCA, depending on the nature and subject matter of the intelligence," the FCA said in the FoI response.
The FCA's total headcount at July 2018 was 3,739; the whistle-blowing team therefore represents 0.32 percent of its workforce.
"The FCA has almost 4,000 staff and can deploy only 12 to the whistle-blowing team; it signals that whistle-blowing is a low priority.
"The FCA exists to protect the public interest but appears to expend more resource on its roadshows than whistleblowers, who are the principal source of intelligence for the FCA.
"Not only is the whistle-blowing team too small but it also requires significant upskilling to deal more effectively with whistleblowers," Halford-Hall said.