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The FCA’s astonishing lack of MI on whistleblowing

It’s not unusual to get freedom of information requests knocked back by the regulator under FoI cost of compliance rules.

Public and regulatory bodies are able to reject FoI’s that would cost over £450 (18 hours work at £25 per hour) and communications staff are often quick to pounce on anything but the most tightly written FoI to try and escalate the potential costs above the limit.

However, we were very surprised to have a recent pretty simple FoI request made by our regulation reporter Natalie Holt rejected by the Financial Conduct Authority on this basis.

She asked for the number of whistleblowing reports made to the FSA in both the 2011/12 and 2012/13 financial years and also the number of whistleblowing reports in 2012/13 that resulted in enforcement action.

The request was made after FCA chief executive Martin Wheatley made a big deal about the use of whistleblowing at a Parliamentary Commission on Banking Standards hearing earlier this year. He went as far as floating the idea of offering large cash incentives to encourage more people to report foul play to the regulator. 

The remarks followed an FSA pledge last August that the new FCA would place much more emphasis on this type of market intelligence.

The first part of the question could be dealt with easily enough (3,600 and 4,063 respectively) but the other part of the question could not be answered without breaching the FoI cost limit as the regulator has no internal processes in place to track the results of whistleblowing reports it has received. The only help it could provide was that 15 per cent of reports are passed on to various departments for investigation (before disappearing into an information black hole).

When asked for an explanation an FCA spokesman said it was “in the process of updating our systems”, which will hopefully include a simple way of measuring the results of future activity.

But it seems incredible that the regulator can promote a regulatory tool so publicly without having any management information in place to gauge how effective it has been.

Paul McMillan is group editor at Money Marketing- follow him on twitter here

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. RegulatorSaurusRex 30th May 2013 at 10:17 am

    They receive so many pieces of information that they struggle to deal with the volume, most of which is absolute rubbish.

    If the source is reliable they can move swiftly, there are no plans to pay all whistle-blowers for their contributions.

  2. Why am I not surprised that the FCA chose not to track whistle blowers. To track them is to be accountable for them. It may not surprise the reader to know that the FCA do screw up on legitimate whistle blowers and then when events unfold to the substantial detriment of the investor, they look to blame everyone apart from themselves.

  3. I brought this to the attention of money marketing and spent some time researching the subject, unfortunately they chose not to publish my original article which is a real shame because it had a lot more information than the article above.

    You may ask the reasons why I researched this – well I believe protecting one’s trade is very important and all IFA’s should take more interest in it, if we are to survive as businesses. After all if you’re a gas engineer you really don’t want to be competing against unauthorised gas engineers and end up paying for their mistakes.

    In my freedom of information request I actually obtained the figures the 2012 and they are as follows:

    The Unauthorised Business Department received approximately 6000 reports in 2012 of which approximately 750 cases referred for further investigations. That’s only 12 ½%, the UBD were unable to give specific details on how many of these cases resulted in prosecutions because it would exceed the 10 hour limits.

    Now I don’t know about you but giving approximate figures is always a worry as it gives the impression that the figure was just simply made up and not being able to give an accurate figure on how many prosecutions surely shows a department that is not run efficiently.

    The FCA’s main statutory objective is to protect the consumer’s but how can they protect the consumer when it treats whistle blowing reports with no regard. Over the last few years I’ve read comments about regulator from different individuals in the common theme is that we need to hold our regulator to account as nobody seems to be asking the right questions.

    If our regulator has a statutory objective to protect consumers and surely there are simple stats that the regulator can publish on a regular basis demonstrating that they are meeting this objective. Because when I go online and do a simple search for financial advice it is clear that they are not meeting this objective. All scams and frauds start somewhere primarily online and you will thought that this Department would have the re-sources to check basic authorisation, after all the FCA has a budget of 456 million that the UBD only has 38 staff. Yes you did read right 38 and I suspect most of them are unqualified.

    Surely that’s what the FSMA 2000 and 2012 is all about checking who is authorised to give financial advice.

  4. Julian Stevens 1st June 2013 at 10:55 am

    Surely, an organisation that seems forever to be spending endless millions of pounds of OPM on its IT systems should have no difficulty with creating a process to track progress on and the outcomes of investigations into whistleblowing reports?

    It’s hard to imagine how such a task would take any half competent IT consultant more than a day or two.

    Upon receipt, the report would be logged, allocated a case reference and thereafter any updates should be available on request at the press of a few buttons. Such updates could even be made available online without any regulatory staff needing to be directly involved. How could such a system be either complicated or expensive to set up? How could each interim progress report possibly cost more than £450? The only expense, perhaps, would be providing responses to questions as to why, after half a dozen update checks over as many months, bugger all appeared to have happened. Even then, the expense of providing such responses would, in most cases, be attributable to inefficiency on the part of the regulator, not the system itself.

    In sharp contrast, the FSA/FCA’s hated GABRIEL reporting system is, anecdotally:-

    1. extremely badly designed,

    2. extremely user UN-friendly,

    3. extremely time consuming and frustrating for those forced to comply with it,

    4. its requirement for the submission of so much data appears to be totally OTT and

    5. the FCA has so far refused to offer any explanation as to what it wants with it all or what it actually does with it.

    Needless to say (as far as I’m aware), no consultation was undertaken with the industry in terms of arriving at a process that both sides can agree to be acceptable in terms of striking a fair balance between what the regulator considers it needs to know and what regulated parties considers reasonable for them to have to collate and submit.

    And yet, in stark and shameful contrast, the regulator appears to be unwilling or unable to make any real effort to create its own system for tracking whistle-blowing reports and reporting on them. The FCA wants whistle-blowers to come forward but has in place no system to keep people reasonably informed of what it actually does with those reports. How can it expect anyone to bother when it’s failed to establish a system able to provide the simple courtesy of regular feedback? Regulation, it seems, is still very muchj a one-way street.

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