The Financial Conduct Authority has admitted it does not track whether further regulatory action is taken when whistleblowing reports are handed over to other internal departments.
A freedom of information request, submitted by Money Marketing, reveals the FSA’s whistleblowing team received 4,063 tip-offs between 1 April 2012 and 31 March 2013, up 13 per cent from 3,600 the previous year.
When asked to provide the number of whistleblowing reports received in 2012/13 that resulted in enforcement action, the regulator was unable to do so.
The FoI reveals the FSA did not record what happened in the 15 per cent of the whistleblowing reports it received in 2012/13, which were passed to other FSA departments. The regulator adds the cost of now finding out whether regulatory action was taken in these cases would exceed the £450 limit to comply with an FoI request.
The FCA first pledged to strengthen its use of market intelligence from the industry last August. FCA chief executive Martin Wheatley has stressed he wants to work closer with the industry to spot potential problems, saying in March the regulator will be “much more sensitive to information about financial products and the way they are being sold”.
The FCA also consulted earlier this year on giving whistleblowers more information and providing the industry with an overview of the type of action taken, as part of plans for greater regulatory transparency.
An FCA spokesman says: “Whistleblowing is a valuable source of information and we take each allegation extremely seriously. We are in the process of updating our systems so we can check the final outcome of a whistleblower report quicker than before.”
Lansons director of regulatory consulting Richard Hobbs says: “Surely a regulator should have the management information to show how effective whistleblowing is.
“The regulator seems to believe whistleblowing is a regulatory tool worth improving. But how does it know if it has not got the data? There is a gap in its logic there.”
Apfa policy director Chris Hannant says: “There is nothing worse than trying to encourage people to come forward if the information is just going to disappear into a black hole. It is important for the regulator to demonstrate what it has done with reports to show whistleblowing is worthwhile.”
Hudson Green & Associates principal Ian Hudson says: “Treating customers fairly is all about measuring successful outcomes and the same principles should apply to the regulator.”