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  3. Point in time
    2019-01-31

SYSC 18.3 1Internal arrangements

Arrangements to be appropriate and effective

SYSC 18.3.1RRP
  1. (1)

    A firm must establish, implement and maintain appropriate and effective arrangements for the disclosure of reportable concerns by whistleblowers.

  2. (2)

    The arrangements in (1) must at least:

    1. (a)

      be able effectively to handle disclosures of reportable concerns including:

      1. (i)

        where the whistleblower has requested confidentiality or has chosen not to reveal their identity; and

      2. (ii)

        allowing for disclosures to be made through a range of communication methods;

    2. (b)

      ensure the effective assessment and escalation of reportable concerns by whistleblowers where appropriate, including to the FCA or PRA;

    3. (c)

      include reasonable measures to ensure that if a reportable concern is made by a whistleblower no person under the control of the firm engages in victimisation of that whistleblower;

    4. (d)

      provide feedback to a whistleblower about a reportable concern made to the firm by that whistleblower, where this is feasible and appropriate;

    5. (e)

      include the preparation and maintenance of:

      1. (i)

        appropriate records of reportable concerns made by whistleblowers and the firm’s treatment of these reports including the outcome; and

      2. (ii)

        up-to-date written procedures that are readily available to the firm’s UK-based employees outlining the firm’s processes for complying with this chapter;

    6. (f)

      include the preparation of the following reports:

      1. (i)

        a report made at least annually to the firm’s governing body on the operation and effectiveness of its systems and controls in relation to whistleblowing (see SYSC 18.3.1R); this report must maintain the confidentiality of individual whistleblowers; and

      2. (ii)

        prompt reports to the FCA about each case the firm contested but lost before an employment tribunal where the claimant successfully based all or part of their claim on either detriment suffered as a result of making a protected disclosure in breach of section 47B of the Employment Rights Act 1996 or being unfairly dismissed under section 103A of the Employment Rights Act 1996;

    7. (g)

      include appropriate training for:

      1. (i)

        UK-based employees;

      2. (ii)

        managers of UK-based employees wherever the manager is based; and

      3. (iii)

        employees responsible for operating the firms’ internal arrangements.

SYSC 18.3.2GRP
  1. (1)

    When establishing internal arrangements in line with SYSC 18.3.1R a firm may:

    1. (a)

      draw upon relevant resources prepared by whistleblowing charities or other recognised standards setting organisations; and

    2. (b)

      consult with its UK-based employees or those representing these employees.

  2. (2)

    In considering if a firm has complied with SYSC 18.3.1R the FCA will take into account whether the firm has applied the measures in (1).

  3. (3)

    A firm may wish to clarify in its written procedures for the purposes of SYSC 18.3.1R(2)(e)(ii), that:

    1. (a)

      there may be other appropriate routes for some issues, such as employee grievances or consumer complaints, but internal arrangements as set out in SYSC 18.3.1R(2) can be used to blow the whistle after alternative routes have been exhausted, in relation to the effectiveness or efficiency of the routes; and

    2. (b)

      nothing prevents firms taking action against those who have made false and malicious disclosures.

SYSC 18.3.3GRP
  1. (1)

    A firm may wish to operate its arrangements under SYSC 18.3.1R internally, within its group or through a third party.

  2. (2)

    Firms will have to consider how to manage any conflicts of interest.

  3. (3)

    If the firm uses another member of its group or a third party to operate its arrangements under SYSC 18.3.1R it will continue to be responsible for complying with that rule.

Training and development

SYSC 18.3.4GRP

A firm’s training and development in line with SYSC 18.3.1R(2)(g) should include:

  1. (1)

    for all UK-based employees:

    1. (a)

      a statement that the firm takes the making of reportable concerns seriously;

    2. (b)

      a reference to the ability to report reportable concerns to the firm and the methods for doing so;

    3. (c)

      examples of events that might prompt the making of a reportable concern;

    4. (d)

      examples of action that might be taken by the firm after receiving a reportable concern by a whistleblower, including measures to protect the whistleblower’s confidentiality; and

    5. (e)

      information about sources of external support such as whistleblowing charities;

  2. (2)

    for all managers of UK-based employees wherever the manager is based:

    1. (a)

      how to recognise when there has been a disclosure of a reportable concern by a whistleblower;

    2. (b)

      how to protect whistleblowers and ensure their confidentiality is preserved;

    3. (c)

      how to provide feedback to a whistleblower, where appropriate;

    4. (d)

      steps to ensure fair treatment of any person accused of wrongdoing by a whistleblower; and

    5. (e)

      sources of internal and external advice and support on the matters referred to in (a) to (d);

  3. (3)

    all employees of the firm, wherever they are based, responsible for operating the firm’s arrangements under SYSC 18.3.1R, how to:

    1. (a)

      protect a whistleblower’s confidentiality;

    2. (b)

      assess and grade the significance of information provided by whistleblowers; and

    3. (c)

      assist the whistleblowers’ champion (see SYSC 18.4) when asked to do so.

SYSC 18.3.5GRP

Where a firm operates its arrangements under SYSC 18.3.1R through another member of its group or a third party it should consider providing the training referred to in SYSC 18.3.4G(3) to the persons operating the arrangements by the group member or third party.

Reporting of concerns by employees to regulators

SYSC 18.3.6RRP

This rule applies to an EEA SMCR banking firm3 and a third-country SMCR banking firm3.

2
  1. (1)

    A person subject to this rule (‘P’) 2must, in the manner described in (2), communicate to its UK-based employees that they may disclose reportable concerns to the PRA or the FCA and the methods for doing so. P 2must make clear that:

    1. (a)

      reporting to the PRA or to the FCA is not conditional on a report first being made using P’s 2internal arrangements;

    2. (b)

      it is possible to report using P’s 2internal arrangements and also to the PRA or FCA; these routes may be used simultaneously or consecutively; and

    3. (c)

      it is not necessary for a disclosure to be made to P 2in the first instance.

  2. (2)

    The communication in (1) must be included in the firm’s employee handbook or other equivalent document.2

SYSC 18.3.6AGRP

For the purposes of SYSC 18.3.6R(1) the possibility for P’s employees to disclose reportable concerns to the PRA or to the FCA does not override any obligation of P or its employees to report breaches to P’s Home State regulator of matters reserved by an EU instrument to that regulator.

SYSC 18.3.7RRP

Firms must ensure that their appointed representatives or, where applicable, their tied agents, inform any of their UK-based employees who are workers that, as workers, they may make protected disclosures to the FCA.

Appointed representatives and tied agents

SYSC 18.3.8GRP

Firms are encouraged to invite their appointed representatives or, where applicable, their tied agents to consider adopting appropriate internal procedures which will encourage workers with concerns to blow the whistle internally about matters which are relevant to the functions of the FCA or PRA.

Link to fitness and propriety

SYSC 18.3.9GRP

The FCA would regard as a serious matter any evidence that a firm had acted to the detriment of a whistleblower. Such evidence could call into question the fitness and propriety of the firm or relevant members of its staff, and could therefore, if relevant, affect the firm’s continuing satisfaction of threshold condition 5 (Suitability) or, for an approved person or a certification employee, their status as such.

2Additional rules for UK branches

SYSC 18.3.10RRP
  1. (1)

    This rule applies where an EEA SMCR banking firm3 or a third-country SMCR banking firm3 has:

    1. (a)

      a branch in the United Kingdom; and

    2. (b)

      a group entity which is a UK SMCR banking firm3.

  2. (2)

    An EEA SMCR banking firm3 and a third-country SMCR banking firm3 must, in the manner described in (3), communicate to the UK-based employees of its UK branch:

    1. (a)

      the whistleblowing arrangements of the group entity that is a UK SMCR banking firm3; and

    2. (b)

      indicate that these arrangements may be used by employees of its UK branch.

  3. (3)

    The communication in (2) must be included in the branch’s employee handbook or other equivalent document.