City watchdog spends more on CEO pay than aiding whistleblowers

At a cost of £500,000, the team was less expensive than the £589,000 wage bill for the FCA’s boss, Andrew Bailey

FCA has been pushing banks to improve their conduct in a country that’s home to the world’s biggest foreign exchange market and some of the largest financial institutions (Getty Images)

The UK’s financial watchdog spent less last year on the team handling whistleblowers’ allegations than it did on its chief executive’s salary.

The Financial Conduct Authority employed seven staff to interview whistleblowers, assess their information and pass details to other parts of the agency in 2018, according to figures released under freedom of information rules.

At a cost of £500,000, the team was less expensive than the £589,000 wage bill for the FCA’s boss, Andrew Bailey.

This year, there are a dozen employees in the British regulator’s whistleblower unit and the FCA estimated that the cost of staffing the operation had risen to £800,000, or about 0.2 per cent of the regulator’s annual budget.

The FCA has been pushing banks to improve their conduct in a country that’s home to the world’s biggest foreign exchange market and some of the largest financial institutions. The London-based watchdog regularly receives more than 1,000 tip-offs per year.

The agency devotes more resources to whistleblowing now than it did in 2013, when it employed just two full-time staff to deal with allegations. The figures released to Bloomberg highlight the limited resources for handling complaints of wrongdoing in the UK financial services industry.

“There are certainly not enough people on the team and that just isn’t acceptable,” said Georgina Halford-Hall, chief executive of WhistleblowersUK, which supports people bringing complaints against their employers.

“Most people want to do the right thing, but don’t trust the FCA because they have no confidence that it will bring about any form of investigation, and it may result in them losing their job.“

The FCA said the number of staff involved in whistleblowing casework can “vary significantly” and extend beyond the specialist team, depending on the type of issues raised.

“At any one time, there may be many members of staff dealing with issues that have been raised by whistle-blowers, either carrying on investigations or undertaking supervisory work,” it said in a statement.

“London is the beating heart of the global banking system and to me having 12 people in the whistleblowing team is the bare minimum I would expect them to have,” said Mary Inman, a partner at Constantine Cannon, a US law firm that helps whistleblowers through the American system.

The US Securities and Exchange Commission employs 21 people in its Office of the Whistleblower, which has the power to give financial rewards to those who inform on wrongdoing.

Whistleblowing has risen up the FCA’s agenda in recent years after some high-profile missteps. Last year, the agency was criticised by the Financial Regulators Complaints Commissioner after it revealed the identity of a Royal Bank of Scotland whistleblower.

“To be quite honest, I think it’s too dangerous for a whistleblower to go to the regulator as things stand,” said Mark Wright, the former RBS employee who received an apology from the FCA for identifying him.

“You can’t have whistleblowers going out and risking everything, their careers, their homes, being blackballed from the industry, while the regulator gives them no protection.”

Last year, when the FCA fined Barclays chief executive Jes Staley for his attempts to unmask the identity of a whistleblower, the regulator said tip-offs played a “vital role in exposing poor practice and misconduct in the financial sector.”

“I think they are heading in the right direction in upscaling their whistle-blowing capability so they can be more reactive in what comes down the stream,” said Richard Burger, head of financial services regulatory investigations at DWF, a law firm.

Bloomberg