Whistleblowers face emotional turmoil as claims of wrongdoing by companies stay at FCA

Some whistleblowers are forced to wait more than a month for their cases to pass to the appropriate department of the Financial Conduct Authority.

Andy Agathangelou, founder of campaign group Transparency Task Force, said these delays were “unacceptable”.

Of the 68 cases sitting with the watchdog’s whistleblowing team as of June 29, 15 were more than 30 days old, according to figures obtained by Financial News under the Freedom of Information Act.

“Given the emotional turmoil many whistleblowers find themselves in, it’s an agonizingly long wait,” he said.

The FCA has already faced criticism for failing to act on reports of malpractice in the case of now-collapsed minibond provider London Capital and Finance.

Whistleblower waiting times add more headaches for FCA chief Nikhil Rathi as the regulator grapples with falling morale, increased post-pandemic workloads and increased government oversight of the UK as it presents its post-Brexit Financial Services and Markets Bill.

The FCA has been contacted for comment.

Georgina Hallford-Hall, chief executive of Whistleblowers UK, told FN: “If they report things related to money laundering and other illicit processes, that means crime is going on. Whistleblowers are deeply frustrated. You you feel vulnerable.”

By the end of May, 12 complainants had been waiting for the team to transfer their cases to the appropriate department for more than 30 days. Since the FCA began collecting data on the age of cases in June 2021, in all but two months at least five complaint cases had been pending for more than 30 days.

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David Capps, partner at law firm Ashurst, said that while the delays are “a potential source of frustration and anxiety” for whistleblowers, the volume of reports to FCA officials “means they face a task discouraging”.

The pandemic has put pressure on the FCA and the firms it regulates, forcing it to scale back some workflows and scrap others entirely. These included the abandonment of a study into investment platform exit fees and the delay in rolling out reporting requirements under the Senior Managers and Certification Regime. The FCA has also taken on costs due to Brexit which reached £15m in its 2020/21 financial year.

Between April 2021 and March 2022, the FCA received 1,041 complaints, according to its annual report, around 60% more than in 2012. The number of staff in the complaints team between 2019 and 2021 has oscillated between 12 and 14, with a goal. of 16, reveals FN’s FOI request.

Douglas Cherry, partner at law firm Reed Smith, said: “It’s not clear that the regulator really has the resources to deal with the increase, and that’s before even considering the hangover from Covid-19 . The nature of many whistleblowing complaints have immediate impacts to consider.”

The data provided to FN covers the number of cases assigned to whistleblower team members, but has not yet been drawn up as a so-called intelligence record for review.

Although reports have not been directly investigated by the FCA’s complaints team (which FCA department investigates complaints will depend on the nature of the complaints) since April 2019, there have been seven months in which at least 100 cases had not yet been released.

In June 2021, the whistleblowing team began tracking the number of cases older than 30 days that had not yet been transmitted, raising the data every five to six weeks with the regulator’s divisional leaders . A key performance indicator to measure the effectiveness of whistleblowing procedures has not yet been established, the FCA said in its response to FN’s request.

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“The FCA’s choice for the complaints team not to use key performance indicators to measure the effectiveness of its complaints procedures is peculiar and perhaps indicative of how out of touch the FCA has become,” he said Tasha Benkhadra, partner at Corker Binning law firm.

A spokesman for the Treasury Committee of MPs, the lawmakers tasked with holding the regulator to account, said it was “certainly something we will be keeping an eye on”.

Mary Robinson MP, who chairs the all-party parliamentary group on whistleblowing, is calling for a whistleblowing bill to be brought into government to streamline the way bad practice is reported.

Feedback from whistleblowers suggests the delays are leading them to “lose faith in the regulator as a result of their experience”, Robinson told FN.

The Covid-19 pandemic has yet to lead to an increase in whistleblowing reports: Part of a May 2021 internal briefing released to FN under the FOI Act notes that the volume of whistleblower reports received for 2020 was 1058, a reduction of 121 compared to the previous year.

Groups, including the Association of Professional Compliance Consultants, have become frustrated with paperwork delays in other parts of the regulator, which the FCA has sought to address this year.

The regulator has added around 100 new roles to its authorizations department in a bid to quell the backlog of companies getting approval to trade.

To contact the author of this story with comments or news, email Justin Cash


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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!