Freshfields whistleblowing survey 2023: Anonymous whistleblowing in UK financial services firms - are managers’ views at odds with the regulators?

In the UK, both the main UK financial regulators (the FCA and PRA) have detailed rules on the systems and controls that financial services firms are required to have in place for whistleblowing. This includes the need for firms to be able to allow individuals to report concerns anonymously. For many firms in the financial services sector in the UK, this has led to the introduction of a whistleblowing hotline, which individuals can use to report concerns on either an anonymous or identifiable basis. 

There are some benefits to both a firm and an individual from anonymous reporting. For the individual, it gives them an avenue to raise concerns without fear of retaliation or reprisal. For the firm, it may allow them to hear about concerns that would not otherwise have been raised, and give firms the best opportunity for early identification, and hopefully remedy, of issues. 

Our survey results 

Recent data from the Freshfields whistleblowing survey (which collected views from over 2,500 individuals across 13 industries and five regions) suggests that tensions may arise where a whistleblower chooses to remain anonymous when raising concerns. For example, our survey found that 61 per cent of managers in financial services in the UK considered that it was important for them to know the identity of a whistleblower – a significant increase compared to the results of our 2020 whistleblowing survey, which found that 26 per cent of managers in financial services in the UK considered this to be important. This is a surprising increase given the regulatory requirement for anonymous whistleblowing channels in the financial services sector. 

We expect that underpinning this data is more than just a manager’s curiosity in wanting to know who has raised concerns. Some managers may be cynical about a whistleblower’s motivation, and feel that they need to know their identity in order to weigh the credibility of the information provided.  This is not a view that would be supported by the regulatory framework around whistleblowing. Another factor might be the perception that difficulties can arise where a whistleblower has decided to remain anonymous. For example:

• If the whistleblower is anonymous and has used a reporting channel which offers no way to communicate with them, that can make an investigation difficult from the outset. It might be that to investigate properly a firm needs additional information or evidence to understand the whistleblower’s complaints. If there is no communication channel with the whistleblower that could impact a firm’s ability to investigate complaints (depending on the quality of the information provided in the whistleblower’s first disclosure).  

In some cases, this difficulty may be overcome. The whistleblower may have raised concerns through an anonymous channel which offers a means of continuing communication (as many web-based reporting channels now do).  In that situation (and assuming the whistleblower is prepared to engage), it may be possible for a firm to ask for further information or evidence to help with the investigation.

Even if there is a channel of communication between the employer and whistleblower, difficulties could still arise during the investigation itself. For example, tension can arise where the identity of the whistleblower would become obvious to the subject of the allegations if full details of the allegations were provided. It may be possible to give the subject information on the allegations at a high-level, but there is a difficult balance to strike between protecting a whistleblower’s identity and providing sufficient information for the subject to consider the allegations and respond fully.

• Some managers may also be concerned that without knowing the identity of the whistleblower they would not be able to provide appropriate support, or take steps to effect any immediate changes pending the outcome of an investigation. For example, it may be that changes need to be made to the whistleblower’s day to day working arrangements, such as their reporting structure or physical location, to provide appropriate protection and support. 

Regardless of the underlying reason for managers wanting to know the identity of whistleblowers, it is important for firms to remind their employees that anonymity and confidentiality need to be protected, given the robust ongoing approach taken by the UK regulators to compliance with whistleblowing procedures.  Any attempt to find out the identity of an anonymous whistleblower (whatever the motivation) may have serious repercussions reputationally and from a regulatory perspective. 

Improving confidence to speak up

Ultimately, if the majority of whistleblowers in any firm are choosing to raise concerns anonymously, that may indicate that there is a problem with the firm’s speak up culture. 

The results of our survey show that it remains important that firms give whistleblowers confidence to raise concerns confidentially (even if not anonymously). To do this, firms need to increase workforce confidence in their internal procedures and to ensure that individuals understand how a report would be handled, including that the identity of the whistleblower will be protected and only shared where necessary. Firms could also, where appropriate, seek to celebrate or shine a spotlight on individuals that have spoken up. We have discussed ‘top tips’ for organisations to improve their policies and procedures in a previous blog post (here). 

To access the full whistleblowing survey report, please click here. The Freshfields team would be very happy to discuss any of the themes in the report in more detail.