2 Firms are reminded that for the purpose of SYSC 18 (except for SYSC 18.3.9G) “firm” has the specific meaning set out in paragraph (8) of that definition in the Glossary, namely:

1. “(8) (in SYSC 18, with the exception of the guidance in SYSC 18.3.9G):5

   (a) a UK SMCR banking firm6 except a small deposit taker; and

   3
2. (b)

   a firm as referred to in Chapter 1.1 of the PRA Rulebook: Solvency II Firms: Whistleblowing Instrument 2015.”

2A firm not referred to in SYSC 18.1.1AR may adopt the rules and guidance in this chapter as best practice. If so, it may tailor its approach in a manner that reflects its size, structure and headcount.

1. (1)

   The purposes of this chapter are to2:

   1. (a)

      set out the requirements on firms in relation to the adoption, and communication to UK-based employees, of appropriate internal procedures for handling reportable concerns made by whistleblowers as part of an effective risk management system (SYSC 18.3);2

   2. (b)

      set out the role of the whistleblowers’ champion (SYSC 18.4);2

   3. (c)

      require firms to ensure that settlement agreements expressly state that workers may make protected disclosures (SYSC 18.5) and do not include warranties related to protected disclosures;2

   4. (ca)

      set out the requirements which implemented7 the whistleblowing obligation under article 73(2) of MiFID, which requires MiFID investment firms (except collective portfolio management firms) to have in place appropriate procedures for their employees to report potential or actual infringements of the MiFID regime7 (SYSC 18.6);5

   5. (cb)

      outline other EU-derived whistleblowing obligations similar to those in article 73(2) of MiFID, some of which may also be applicable to MiFID investment firms (SYSC 18.6);5

   6. (d)

      outline best practice for firms which are not required to apply the measures set out in this chapter but which wish to do so; and2

   7. (e)

      outline the link between effective whistleblowing measures and fitness and propriety.2

2. (2)

   [deleted]2

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.

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.

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.

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.

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.

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.

1. (1)

   A UK SMCR banking firm4 is required under SYSC 24.2.1R4 to allocate the FCA-prescribed senior management responsibility for acting as the firm’swhistleblowers’ champion.

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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.

When considering what procedures may be appropriate for the purposes of SYSC 18.6.1R(1), a UK MIFID investment firm or a third country investment firm may wish to consider the arrangements in SYSC 18.3.1R(2).

In addition to obligations under the MiFID regime2, similar whistleblowing obligations apply to miscellaneous persons subject to regulation by the FCA under the following non-exhaustive list of 2legislation:4

1. (1)

   article 32(3) of the Market Abuse Regulation, as implemented in section 131AA of the Act;

2. (2)

   [deleted]5

   2
3. (3)

   the UK provisions which implemented2 article 99d(5) of the UCITS Directive (see SYSC 4.1.1ER in respect of UKUCITS management companies, and COLL 6.6B.30R in respect of depositaries) ;4

   3
4. (4)

   article 24(3) of the securities financing transactions regulation; and34

5. (5)

   section 97A of the Act, as regards obligations under the Prospectus Regulation, the PR Regulation, and the Prospectus RTS Regulation.4

   3

Depending on the nature of its business, in addition to SYSC 18.6.1R, a MiFID investment firm may, for example, be subject to one or more of the requirements in SYSC 18.6.4G.