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FCA chief exec Martin Wheatley considers paying whistle blowers

Martin Wheatley
Martin Wheatley: Grilled by the banking commission

FCA chief executive-designate Martin Wheatley has opened the door to paying large US-style cash incentives to financial whistle blowers.

Speaking to the Parliamentary Commission on Banking Standards this morning, Wheatley said he is studying the US system closely and could make changes in the UK.

Under US financial regulatory reforms financial whistle blowers will be incentivised to come clean by keeping 20 per cent to 30 per cent of the proceeds of any crime successfully prosecuted.

Wheatley says: “We are absolutely interested in it. We have spoken to the US authorities and are looking very carefully at it but it is too early to make a judgement yet. They haven’t brought a successful prosecution based on whistle blowing yet but one is at an advanced stage. There is more time needed whether that system works well.

“The key difference to us is the incentive structure. Under our system it is a moral incentive to do the right thing whereas the US system operates a financial incentive and there are some pros and cons to both.”

The FSA receives up to 4,000 whistle blowing reports every year with 12 per cent then pursued as “actionable intelligence”.

FSA chairman Lord Adair Turner said the Libor rigging scandal has highlighted the crucial role whistle blowers can play in exposing corruption.

He says: “None of the authorities around the world independently knew it was going on. We began by looking at lowballing rumours and then as a by-product we discovered trader manipulation.

“I don’t think we could ever have known about it with a supervisor in every trading room. How big would a police force need to be to spot every crime that occurs?

“One of the few mechanisms available is whistle blowing so we need to think more deeply about it than in the past.”

Wheatley highlighted cases of whistle blowing over benchmark manipulation and potentially fraudulent products that have been pursued.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Good intentions, but really?… surely open to abuse from disgruntled employees or clients?

  2. Those wishing to take on an American model will probably think that they are advocating civilised, moral behavior. Think again. Think one of the world’s most corrupt, morally and now financially bankrupt societies and do not copy.

  3. The moral incentive to ‘do the right thing’ has usually turned out to be a hiding for nothing for the whistle-blowers concerned.

    In fact, usually the reverse applies and they often end up bitterly regreting ever opening their mouths.

    Therefore, wonga, and lots of it will now be the only worthwhile incentive for most potential snitches.

  4. Persecuted of Berkshire 27th February 2013 at 4:13 pm

    In my opinion the biggest perpetrator of crime from an IFA’s point of view is the amount of money extorted from us to pay the FSA and FSCS fees. Sants (and his ilk) got away with millions and a knighthood, do I get paid for shopping him?

  5. Just make the cheque out to Mr B Diamond and I will tell you everything and while you are there just make one out to my mate Mr Goodwin, we are both a bit short at the moment.

  6. I seem to recall reading that is precisely what the Nazis did. They rewarded those in the Hitler Youth if they shopped their own parents. We have a Regulator, a Police Force, HMRC and heaven only know how many Quangos and apparatchiks who are authorised to stick their noses in other people’s affairs and yet all this is not enough – now they want to outsource detection.

    What sort of world are we living in? Here we have UKIP bleating about the EU, but I wonder if they would take this sort of measure in Brussels? They were a lot closer to dictatorships than we were.

  7. RegulatorSaurusRex 28th February 2013 at 9:23 am

    “One of the few mechanisms available is whistle blowing so we need to think more deeply about it than in the past.”

    Don’t think too deeply, some of your people think it is “complex” and so it is filed under B for Bin.

  8. I blew the whistle on a mortgage broker who had colluded with an IFA to raise mortgages on clients homes so that the IFA could invest the money for the clients in the Integrity GTEP plans.

    Despite cogent and compelling evidence that the mortgage broker had committed multiple breache of regulation and obtained the funds using untruthful income criteria, the FSA did nothing to curb his activities.

    Even the network denied any wrongdoing despite the evidence of possible fraud and shortly after this guy left his network after a barrage of complaints against him and is now still authorised by another firm to conduct investment and mortgage business.

    What use is whistleblowing if the FSA do not act on the information and protect consumers!.

    Sounds like they are desperate for us to help them spot the wrongdoers, yet when we do, they do nothing to stop them.

    Whatever happened to honest regulation and adequate supervision ?

  9. The real difference between the US and the UK is they put the financial criminals in jail when caught. Whistleblowers are often the pariahs of the industry when uncovering corruption and over high risk exposure etc to the authorities over here, and what happens to the miscreants? Nothing!
    If a paid whistleblower reported the unfair practices used to sell PPI, the payment would have been huge. But not as big as the sums being paid to CM firms today.
    If LIBOR was blown early, reputations would not suffer, but as it is, they have been.
    Whistleblowing is the only way the ethical can strike back at the unethical. The unethical have had it their own way for too long, time to strike back, give them the money, mummy!

  10. “Spying, snooping and informing on your neighbours are the institutionalised paranoia which is the natural accompaniment of totalitarianism. That’s the way we’re going in the EU in general and in Britain in particular: Eastern Europe pre-1989” (Rev P Mullins, writing in the daily telegraph July 2012)

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