Home Finance Speaking Up: Why Whistleblowers Have Become Valued Assets in Financial Services

Speaking Up: Why Whistleblowers Have Become Valued Assets in Financial Services

by internationalbanker

By Nick Marshall, Partner, Employment & Incentives Practice, and Adam Lurie, Partner and Head of Litigation, Arbitration & Investigations, Linklaters




Not long ago, the word whistleblowing was synonymous with troublemaking. Too often, fears of raising concerns and risks of retaliation meant that wrongdoing went unchallenged, sometimes with tragic consequences. However, the influences of greater legal protections and changes in society more generally have created a subtle but positive shift in how whistleblowers are perceived. The whistleblower’s value in exposing wrongdoing and his or her place as a key pillar of good governance are now widely recognised and embraced.

The evolution of whistleblowing

As the 25th anniversary of the United Kingdom’s whistleblowing laws approaches, the landscape is now very different from what it once was. The Public Interest Disclosure Act 1998 marked the UK as a pioneer in its protection of whistleblowers at a time when many European countries had no specific legal protections in place. But cultural changes did not happen overnight. The 2008 financial crisis was a stark reminder of how people continued to turn a blind eye to misconduct and failed to report it.

Recognising whistleblowers’ critical roles in exposing poor practices, the UK’s financial services regulators, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), announced their own detailed rules on whistleblowing in 2015. Despite an increase in the number of whistleblowers in the financial-services sector in the wake of the rules, 70 percent of respondents in one survey claimed that they were either victimised, dismissed or resigned, and 33 percent said that their concerns were ignored.1

Various campaigns have aimed to reassure financial-services workers who raise concerns, as awareness of workers’ rights under whistleblowing laws in the UK continues to grow steadily. (There has been a steady increase in awareness of whistleblowing laws over the years, from 26 percent in 2013, 33 percent in 2015, 38 percent in 2018 and 48 percent in 2021.)2 The rise in the number of whistleblowing claims in the UK’s Employment Tribunal (from 1,395 in 2014-15 to 3,128 in 2020-21) also suggests that those who speak up in the workplace are more aware of their legal rights and are more willing to assert them.

In the United States, there are many whistleblower protections, but the two prominent statutes affecting financial services are the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010. Similarly, the US has various regulators that cover financial services and institutions. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have designated whistleblower programmes and rules as required under the Dodd-Frank Act. More recently, in August 2022, the SEC adopted two amendments to its rules governing the whistleblower programme. (The two rule amendments primarily focused on award payments concerning [1] non-SEC actions and [2] increases to dollar amounts.)3 Although there has been significant progress since the 2008 financial crisis, there are still concerns regarding workplace retaliation and whistleblower protections.4

Further, the COVID-19 pandemic has positively impacted employee reporting. As more people worked from home, there were substantial increases in the number of whistleblower reports observed in both the US and the UK. (According to Bloomberg: “The isolation that comes with being separated from a communal workplace has made many employees question how dedicated they are to their employers, according to lawyers for whistle-blowers and academics. What’s more, people feel emboldened to speak out when managers and co-workers aren’t peering over their shoulders.”5)

In Fiscal Year 2022, the SEC received more than 12,300 whistleblower reports—the largest number received since the inception of its whistleblower programme.6 This suggests that whistleblower protections and the pandemic-induced (physical) distances between companies and their employees have further encouraged people to report wrongdoing.

The changing landscape in financial services reflects a broader culture shift as employers move away from seeing whistleblowing as a “problem” but instead as part of a healthy dialogue between staff and management. This culture shift is likely to have been fuelled, at least in part, by employers promoting speaking-up campaigns, for example, through whistleblowing training. Historically, many organisations focused their training on legal and compliance functions handling complaints and investigations—reflecting their attitudes that whistleblowers were a business risk that needed to be managed and defended against. It is now much more common for training to be rolled out across the wider workforce, encouraging workers to raise concerns and giving them the tools to do so (and reassurances that they will not be victimised) alongside training managers on what to do if someone blows the whistle to them.

And an evolution can be seen not just in the number of whistleblowers but also in the subject matter of disclosures (regardless of whether that subject matter would give the individual legal protections as a whistleblower). Strong environmental, social and governance (ESG) credentials are now at the top of many employers’ (and employees’) agendas. Growing concerns about the climate crisis have shone a spotlight on greenwashing (marketing that portrays an organisation’s products, activities and/or policies as producing positive environmental outcomes when this is not the case7), and employees are increasingly prepared to hold organisations to account for their (mis)statements and (in)actions. Take, for example, the former sustainability officer at an asset manager who blew the whistle, alleging that the organisation had overstated how sustainable some of its financial products were, leading to a significant SEC investigation.

Under the “S” umbrella, global social movements such as Black Lives Matter (BLM) and #MeToo have empowered more employees to challenge toxic work cultures and DEI (diversity, equity and inclusion) issues. In fact, human relations (HR)-related concerns, including racism and harassment, now make up the majority of whistleblowing complaints, according to one UK survey.8

Where are we now?

However, although once hailed as pioneering, the UK has arguably fallen behind.

In 2019, against the backdrop of a patchwork of rules across Europe and a number of scandals, including LuxLeaks (Luxembourg Leaks) and the Panama Papers, highlighting the inconsistencies in protections for whistleblowers, the EU Whistleblowing Directive (the Directive) was born.

It recognised that those on the ground within a company are usually the first to learn about threats or harms to society. But the fact that whistleblowers often risk their careers, livelihoods and health by coming forward in the absence of clearly identified means of protection and safe reporting was a barrier to blowing the whistle.

In setting common, minimum standards for protecting whistleblowers exposing breaches of European Union (EU) law, including the requirement for companies to implement internal reporting channels, the Directive reinforces the important role whistleblowers play in the early detection and effective resolution of risks to the public interest.

Whilst the UK does not have to implement the Directive, the benefits that flow from facilitating reporting and embracing a strong speak-up culture are undoubtedly influencing market practices and providing a model for potential legal reforms. And those benefits are much broader than just reducing legal risks. Commercially, companies that foster speaking up can find themselves with competitive advantages, as both internal and external stakeholders prioritise accountability and transparency, and critical concerns can be identified and addressed earlier, before they morph into more expensive, reputationally damaging or dangerous issues.

Listening up

However, whistleblowing policies alone will generally not be enough. Employers should be prepared to standardise their approaches to handling whistleblowing complaints and investigations to instil confidence in the process. For example, they should consider putting in place an investigation protocol that sets out how a whistleblowing investigation will be undertaken and by whom, ensuring that those responsible for investigating concerns receive appropriate training and are confident enough to undertake robust and impartial investigations.

Many employees are reluctant to come forward with concerns because they have little faith that those concerns will be investigated, or they are worried about retaliation. Regular updates on the status of the investigation and maintaining confidentiality (as far as possible) are therefore critical to encouraging trust in the process. For similar reasons, where possible, whistleblowers and other staff members should be updated once investigations are completed and told of any changes to systems and controls that will be implemented to help prevent the same issues from arising in the future. Open communication and being persuaded that speaking up is not futile contribute to a positive speak-up culture.

The UK Government announced in March 2023 that it would review the UK’s whistleblowing framework. It remains to be seen whether any legislative changes will follow to match recent developments elsewhere. Similarly, on March 15, 2023, the U.S. Senate introduced the bipartisan SEC Whistleblower Reform Act of 2023, aiming to strengthen the SEC’s whistleblower programme. Considering the amendments by the SEC in 2022 and the current legislative push to make it more whistleblower-supportive, we can expect further developments in the United States.9

Meanwhile, in the EU, the European Commission (EC) has commenced enforcement proceedings against several countries (including Germany) that failed to implement the Directive on time, raising concerns about how seriously some governments are taking whistleblowing.

What is clear is that multinational organisations will need to be alert to the growing patchwork of national and international whistleblowing laws as they adjust to a new culture of speaking—and listening—up.



1 Protect: “Silence in the City 2,” 2020.

3 U.S. Securities and Exchange Commission (SEC): “SEC Amends Whistleblower Rules to Incentivize Whistleblower Tips,” 2022-151, August 26, 2022.

4 Knowledge at Wharton: “The Whistleblower’s Dilemma: Do the Risks Outweigh the Benefits?”, Janice Bellace, Maurice Schweitzer and Samir Nurmohamed, November 5, 2019.

5 Bloomberg: “Whistle-Blowing Soars to Record With Americans Working From Home,” Matt Robinson and Benjamin Bain, January 12, 2021.

See also: Protect: “Our 2020 Impact Report – record number of whistleblowers supported,” January 28, 2021.

6 U.S. Securities and Exchange Commission (SEC): “SEC Whistleblower Office Announces Results for FY 2022,” OWB Annual Report 2022, November 15, 2022.

7 Financial Conduct Authority (FCA): “Climate Change and Green Finance,” Discussion Paper DP18/8, October 2018.

8 Safecall: “Whistleblowing Benchmarking Report 2023: Whistleblowing Trends, Issues and Insight – The 2023 Benchmarking Report.”

9 The National Law Review: Bipartisan Bill Bolsters Highly Successful SEC Whistleblower Program,” March 16, 2023.

Nick Marshall is a Partner in the Employment & Incentives group at Linklaters. He regularly assists clients on strategic people-related and business-transformation projects. He is recognised as a leading lawyer in his field, covering high-profile and high-value litigation, complex and sensitive internal and regulatory investigations.

Adam Lurie is the Head of Linklaters’ Dispute Resolution Practice in the United States and the Americas. He is regarded as one of the United States’ top trial lawyers and litigators. Adam draws on his prior experiences in all three branches of the U.S. Government, including as a senior U.S. Department of Justice official, a DOJ white-collar prosecutor and a chief counsel for a committee in the U.S. Congress.

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