An average of 556 people a month have acted as whistleblowers for the UK financial regulator in its first year of existence, demonstrating a 'growing faith' in the watchdog's ability to act against wrongdoing.
The figure represents a 64% increase in whistleblowing to the Financial Conduct Authority (FCA) compared to the last year of its predecessor, the Financial Services Authority (FSA), which received an average of 338 reports a month.
The FCA took over from the FSA in April 2013 and has opened 1,035 cases and created 860 intelligence reports based on the whistleblowing.
Pinsent Masons, a law firm, produced the figures based on FCA data and Michael Ruck, senior financial services enforcement lawyer at the firm and formerly with the FCA, says: "These figures will be welcomed by the FCA as they demonstrate growing faith in the regulator to take action against wrongdoing.”
Ruck notes that last year the FCA's handling of whistleblowing came under fire from the Parliamentary Commission on Banking Standards. The commission reported evidence from whistleblowers that "demonstrated a lack of confidence in the regulator's willingness and ability to support them and to act upon their concerns”.
The majority of whistleblowing cases referred to general regulatory concerns but unauthorised business, fraud and market abuse made up 20% of the intelligence reports.
Since 2008/09, the number of whistleblowing contacts received by the city regulator has rocketed 414%, says Ruck, but he adds that the recent rise in whistleblowing reports is not necessarily a result of more wrongdoing in the City. Instead it is likely the result of the combination of increased focus on compliance and the tightening of controls following criticism from the financial regulator.
“The FCA's focus on individual responsibility, in addition to corporate fines, is starting to change people's behaviour. The threat of multi-million pound fines and a new push toward personal accountability mean that staff at authorised firms should now be very aware of their compliance obligations.”
Whistleblowing is set to rise. Under new government plans whistleblowers who report financial crime could be rewarded with a cut of the money they gain back for the taxman. No doubt, says Ruck, this will lead to a surge of white-collar informants seeking big payouts.
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