The United Kingdom’s Parliament has been considering offering whistleblower bounties similar to those offered under the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act. A commission formed by the Bank of England and the UK Financial Conduct Authority spent time with U.S. regulators to investigate the benefits and the drawbacks of this type of legislation. The commission’s recommendation back to Parliament? A resounding no!
Employees to Bounty Hunters?
Dodd-Frank’s whistleblower bounty programme received a lot of press around the world when it was enacted in July 2010. Offering up to 30 percent of any money recovered by the government from lawsuits of more than $1 million, there was much controversy that whistleblowers will be more incentivised to bypass their internal reporting systems and report directly to the government.
The latest report from the U.S. Office of the Whistleblower has shown these fears to be somewhat misguided, with a sharp increase in year-over-year reports from FY2011 to FY2012 but only a small year-over-year increase in FY2013. Further, these reports yielded only six awards in the past three years. With no real evidence that it will increase the amount of high-quality disclosures received by U.K. regulators as well as the cost and the complexity of setting up a government entity to process the reports and the bounties, the commission sees very little benefit to introducing financial incentives.
A New Whistleblowing Landscape in the U.K.
Despite the rejection of financial incentives, the commission vehemently supports increased regulatory changes “to require firms to have effective whistleblowing procedures, and to make senior management accountable for delivering these.” Later this year the commission will publish proposals on whistleblowing, including requiring firms to have effective mechanisms for employees to raise concerns and be protected from retaliation. Their aim is “to ensure that the culture in firms is one where people are prepared to speak up, as part of improving behaviour…”
Employers in the U.K. should be responding now to increased parliamentary focus around whistleblower culture.
Creating a Speak-Up Culture
For your compliance programme to be effective, employees must feel empowered to speak up. Empowerment thrives in a culture of trust, integrity, and transparency—one where employees feel an obligation to report others who are putting the organisation at risk.
Having an anonymous whistleblowing hotline service as well as more-advanced incident-reporting methods is the first step in creating this kind of culture. Many organisations also use incident management software to capture reports and ensure consistent incident resolution. Organisations must also communicate these values. This includes updating and distributing whistleblowing policies and periodically training employees on their duty to report and training managers on how to handle complaints and prevent retaliation.
Culture change does not happen in a day—it is a continuous process, and the message must be habitually reinforced from the top down to everyone in the organisation. With new whistleblower legislation on the horizon in the U.K., it is a process that organisations should start now.
To learn more about creating a culture of compliance, read our whitepaper, Creating a Culture of Ethics, Integrity & Compliance: Seven Steps to Success.