The UK's Financial Conduct Authority announced last week that after conducting research into whether the UK should offer financial incentives to whistleblowers (as is now done in the U.S. by the SEC and other regulators), it had concluded that doing so would not be advisable. "The research showed that introducing financial incentives for whistleblowers would be unlikely to increase the number or quality of the disclosures we receive from them," the FCA stated in a paper issued jointly last week with the Bank of England Prudential Regulation Authority.

The FCA stated that after reviewing the use of financial incentives by US regulators, it had concluded, among other things, that:

such incentives did not benefit the vast majority of whistleblowers;

there was no evidence that incentives had brought an increase in the number or quality of disclosures received by the regulators;

it was complicated and costly to manage a system of financial incentives; and 

financial incentives might undermine effective internal whistleblowing mechanisms.

Instead of financial incentives, the FCA stated that it intended to press ahead with certain other regulatory changes, including

requiring firms to have effective mechanisms in place for employees to raise concerns, with accountability for those mechanisms, and for ensuring safeguards for individual employees, resting with the member of senior management responsible for the firm’s whistleblowing regime.

Topics