1This chapter is relevant to every firm to the extent that the Public Interest Disclosure Act 1998 ("PIDA") applies to it.

1. (1)

   The purposes of this chapter are:

   1. (a)

      to remind firms of the provisions of PIDA; and

   2. (b)

      to encourage firms to consider adopting and communicating to workers appropriate internal procedures for handling workers' concerns as part of an effective risk management system.

2. (2)

   In this chapter "worker" includes, but is not limited to, an individual who has entered into a contract of employment.

The guidance in this chapter concerns the effect of PIDA in the context of the relationship between firms and the FCA. It is not comprehensive guidance on PIDA itself.

1. (1)

   Under PIDA, any clause or term in an agreement between a worker and his employer is void in so far as it purports to preclude the worker from making a protected disclosure (that is, "blow the whistle").

2. (2)

   In accordance with section 1 of PIDA:

   1. (a)

      a protected disclosure is a qualifying disclosure which meets the relevant requirements set out in part 4A of the Employment Rights Act 19962;

      2
   2. (b)

      a qualifying disclosure is a disclosure, made in the public interest2, of information which, in the reasonable belief of the worker making the disclosure, tends to show that one or more of the following (a "failure") has been, is being, or is likely to be, committed:

      2
      1. (i)

         a criminal offence; or

      2. (ii)

         a failure to comply with any legal obligation; or

      3. (iii)

         a miscarriage of justice; or

      4. (iv)

         the putting of the health and safety of an individual in danger; or

      5. (v)

         damage to the environment; or

      6. (vi)

         deliberate concealment relating to any of (i) to (v);

      it is immaterial whether the relevant failure occurred, occurs or would occur in the United Kingdom or elsewhere, and whether the law applying to it is that of the United Kingdom or of any other country or territory.

1. (1)

   Firms are encouraged to consider adopting (and encouraged to invite their appointed representatives or, where applicable, their tied agents1 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.

2. (2)

   Smaller firms may choose not to have as extensive procedures in place as larger firms. For example, smaller firms may not need written procedures. The following is a list of things that larger and smaller firms may want to do.

   1. (a)

      For larger firms, appropriate internal procedures may include:

      1. (i)

         a clear statement that the firm takes failures seriously (see SYSC 18.2.1G (2)(b));

      2. (ii)

         an indication of what is regarded as a failure;

      3. (iii)

         respect for the confidentiality of workers who raise concerns, if they wish this;

      4. (iv)

         an assurance that, where a protected disclosure has been made, the firm will take all reasonable steps to ensure that no person under its control engages in victimisation;

      5. (v)

         the opportunity to raise concerns outside the line management structure, such as with the Compliance Director, Internal Auditor or Company Secretary;

      6. (vi)

         penalties for making false and malicious allegations;

      7. (vii)

         an indication of the proper way in which concerns may be raised outside the firm if necessary (see (3));

      8. (viii)

         providing access to an external body such as an independent charity for advice;

      9. (ix)

         making whistleblowing procedures accessible to staff of key contractors; and

      10. (x)

          written procedures.

   2. (b)

      For smaller firms, appropriate internal procedures may include:

      1. (i)

         telling workers that the firm takes failures seriously (see SYSC 18.2.1G (2)(b)) and explaining how wrongdoing affects the organisation;

      2. (ii)

         telling workers what conduct is regarded as failure;

      3. (iii)

         telling workers who raise concerns that their confidentiality will be respected, if they wish this;

      4. (iv)

         making it clear that concerned workers will be supported and protected from reprisals;

      5. (v)

         nominating a senior officer as an alternative route to line management and telling workers how they can contact that individual in confidence;

      6. (vi)

         making it clear that false and malicious allegations will be penalised by the firm;

      7. (vii)

         telling workers how they can properly blow the whistle outside the firm if necessary (see (3));

      8. (viii)

         providing access to an external body such as an independent charity for advice; and

      9. (ix)

         encouraging managers to be open to concerns.

3. (3)
   1. (a)

      Firms should also consider telling workers (through the firm's internal procedures, or by means of an information sheet available from the FCA's website, or by some other means) that they can blow the whistle to the FCA, as the regulator prescribed in respect of financial services and markets matters under PIDA.

   2. (b)

      The FCA will give priority to live concerns or matters of recent history, and will emphasise that the worker's first port of call should ordinarily be the firm (see Frequently Asked Questions on http://www.fca.org.uk/site-info/contact/whistleblowing/faq).

   3. (c)

      For the FCA's treatment of confidential information, see SUP 2.2.4 G.

[Note: article 32 of the Market Abuse Regulation.]5

The FCA would regard as a serious matter any evidence that a firm had acted to the detriment of a worker because they 3had made a protected disclosure (see SYSC 18.2.1G (2)) about matters which are relevant to the functions of the FCA or PRA. 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 certification employee, their 3status as such.

1. (1)

   A UK relevant authorised person2 is required under SYSC 4.7.5R(1)2 to allocate the FCA-prescribed senior management responsibility for acting as the firm’swhistleblowers’ champion.

2. (2)

   SYSC 18.4.2R requires the appointment by an insurer of a director or senior manager as its whistleblowers’ champion.

3. (3)

   This section sets out the role of the whistleblowers’ champion.

4. (4)

   The FCA expects that a firm will appoint a non-executive director as its whistleblowers’ champion. A firm that does not have a non-executive director would not be expected to appoint one just for this purpose.

The whistleblowers’ champion:

1. (1)

   should have a level of authority and independence within the firm and access to resources (including access to independent legal advice and training) and information sufficient to enable him to carry out that responsibility;

2. (2)

   need not have a day-to-day operational role handling disclosures from whistleblowers; and

3. (3)

   may be based anywhere provided he can perform his function effectively.

The role of a whistleblowers’ champion, before the introduction of his or her3 responsibilities under those provisions of SYSC 18 which are to come into force on 7 September3 2016, includes oversight of the firm’s transition to its new arrangements for whistleblowing.