Whistleblowing — definition for UK financial services

Whistleblowing (Whistleblowing (protected disclosures))

Whistleblowing is the reporting of suspected wrongdoing, such as breaches of regulatory requirements or financial crime, by a worker. In the UK, qualifying disclosures are protected from detriment and dismissal under the Public Interest Disclosure Act 1998, and FCA-regulated firms must operate whistleblowing arrangements under SYSC 18.

Whistleblowing is the disclosure by a worker of information about suspected wrongdoing in their organisation, such as regulatory breaches, fraud, market abuse or risks to consumers. A healthy “speak-up” culture is treated by regulators as a key indicator of good conduct and effective risk management, because internal reports often surface problems long before they crystallise into harm.

Legal protection: PIDA 1998

The Public Interest Disclosure Act 1998 (PIDA) inserted whistleblower protections into the Employment Rights Act 1996. To be protected, a disclosure must be a “qualifying disclosure”: a reasonable belief, made in the public interest, that one of the listed types of wrongdoing (such as a criminal offence, breach of a legal obligation, or endangering health and safety) has occurred, is occurring or is likely to occur. A worker who is subjected to detriment or dismissed for making a protected disclosure can claim in the employment tribunal, and dismissal for whistleblowing is automatically unfair with uncapped compensation.

FCA requirements: SYSC 18

Beyond the employment-law floor, the FCA imposes specific obligations through SYSC 18 of its Handbook. In-scope firms must put in place internal whistleblowing channels, appoint a non-executive director or senior manager as the whistleblowers’ champion under SM&CR, tell staff how to report to the FCA and PRA directly, and ensure settlement agreements do not deter disclosures. These rules apply most fully to deposit-takers, insurers and larger investment firms, with others encouraged to follow them as good practice.

Who it applies to

All employers, with enhanced regulatory duties on FCA-regulated firms and their senior managers.

SM&CR, SYSC and conduct risk.

Frequently asked questions

What legal protection do whistleblowers have in the UK?

Workers who make a 'protected disclosure' are safeguarded by the Public Interest Disclosure Act 1998, which amended the Employment Rights Act 1996. A protected disclosure is a qualifying disclosure of wrongdoing made in the public interest; a worker who suffers detriment or dismissal as a result can bring a claim in the employment tribunal, with uncapped compensation for unfair dismissal on whistleblowing grounds.

What do the FCA's whistleblowing rules require of firms?

Under SYSC 18 of the FCA Handbook, in-scope firms must establish and maintain internal whistleblowing arrangements, appoint a senior manager as the whistleblowers' champion, inform staff of the FCA and PRA reporting channels, and include text in settlement agreements clarifying that workers may still blow the whistle. The rules apply most fully to banks, insurers and large investment firms.