Employees may fail to report fraud unless U.K. whistleblower protection is beefed up

Starting in September, the U.K. will begin enforcing its third “failure to prevent” offense under sweeping legislation aimed at tackling corporate crime. But experts are divided about the impact it will have on corporate behavior, as well as whether it will truly push employees to report suspected wrongdoing to either management or regulators, as hoped, due to fear of reprisals.

The key problem is that while whistleblowing is encouraged, disclosure is not incentivized, and employee protections are not being improved. Other obstacles may also bar success. For instance, there has historically been relatively little transparency in the U.K. around the outcome of whistleblower reports, partly due to the fact that U.K. authorities—unlike the United States—do not offer financial rewards in exchange for information, which means there is little fanfare about the role whistleblowers may have played in a company and its executives being brought to book. There is even less publicity about employees being hung out to dry in the wake of making a report.