McDermott defends FCA whistleblowing conduct

Former acting chief executive of the FCA, Tracey McDermott, has maintained that the regulator "acted properly" by not treating a case presented to it as whistleblowing.

Related topics:  Finance News
Rozi Jones
12th August 2016
FCA
"In these cases, the individual customers or their representatives had themselves disclosed their identities and raised their concerns to the banks, prior to our carrying out any investigatory work."

In January 2016, representatives of SME Alliance raised concerns that the FCA had betrayed the confidence of whistleblowers by passing on sensitive information to high street banks who were the subject of their complaints.

Treasury Select Committee Chairman Andrew Tyrie asked Tracey McDermott to respond to claims that SME Alliance representatives have been ‘badly compromised’.

The FCA confirmed in March that it did not treat the SME Alliance as a whistleblower and subsequently disclosed some of its information on individual customers with the banks accused of falsifying their records. Reasons for doing so rest on the SME Alliance not having asked the FCA not to share its information with the bank.

The Treasury Select Committee said that it is not clear from McDermott’s letter whether the FCA raised the issue of confidentiality with the SME Alliance when first approached or clarified that it would not be treated as a whistleblower.

In her most recent letter, published today, McDermott said: "I am disappointed that these serious allegations may have raised doubts in your mind about the protection we give to individuals who provide information to us in confidence.

"In these cases, the individual customers or their representatives had themselves disclosed their identities and raised their concerns to the banks, prior to our carrying out any investigatory work. A number of the individual customers had also repeated their allegations in the press, and on social media.

"The SME Alliance also publicised their engagement with the FCA, for example on Twitter and on their public website, and made it clear that they expected us to follow up their concerns. We were also aware that the SME Alliance was working with The Times and the Chairman of the All Party Parliamentary Group on Fair Business Banking, both of whom presented a number of the same cases directly to the banks involved.

"Notwithstanding our view that these were not whistleblowing cases, we only shared with the banks the minimum information required to review the SME Alliance's allegations and we did not share the file of documents they provided with the banks in question."

In a pre-appointment hearing with the Committee, new FCA chief Andrew Bailey said that the FCA should be "very clear and upfront with people" in regards to whistleblowing, but admitted that it had not been in this case as "unfortunately both sides had a slightly different interpretation ex post".

In response to Tracey McDermott's letter, Andrew Tyrie said: “The FCA was not clear whether it would treat the SME Alliance as whistle-blowers. In his evidence to the Committee last month, Andrew Bailey seems to appear to agree.

“The regulator needs to grasp what’s needed to create an appropriate environment for whistle-blowers. Mr Bailey’s appointment is an opportunity further to implement the recommendations of the Parliamentary Commission on Banking Standards, designed to ensure that whistleblowing will play a role in improving conduct in financial institutions.”

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.