FCA chair says he won’t give up over whistleblower mishandling | USAEMALL.com

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The chair of the UK’s financial watchdog has refused to resign following calls to stand down, after he failed to follow its own rules on protecting the identity of whistleblowers.

Ashley Alder came under fire in August after the Financial Times reported he had forwarded correspondence from two whistleblowers that included their name and details against their will, and despite the Financial Conduct Authority’s whistleblowing policy not to reveal such information.

Politicians, lawyers and representatives of whistleblowers accused the FCA of hypocrisy after an internal probe into Alder’s handling of the internal complaints this week found he “did not follow the policy to the letter . . . [but] his aim was simply to ensure that appropriate action was taken”.

On Thursday, he said he had not considered resigning, in part because of “key aspects that I cannot disclose” of the two instances.

“I am absolutely firm that I acted in the best interests” of the whistleblowers, he said after the FCA’s annual meeting, adding “we obviously regret” that the complainants’ expectations to not have their identities shared “were not met in this instance”.

Defending his decision to forward the names, he said: “It is implausible for non-executives to act in cases that are raised with them without seeking support and advice of senior advisers, who are without doubt on whether they would treat such matters with care.”

His comments come after multiple calls for his resignation over the incident.

“When a regulator discloses the identity of a whistleblower, to me that is going to close down whistleblowing across the UK financial service sector,” said Baroness Susan Kramer, the Liberal Democrats’ Treasury spokesperson in the House of Lords. “I think it is a resigning issue.”

Georgina Halford-Hall, chief executive of campaign group WhistleblowersUK, described the investigation into Alder, which was led by FCA senior independent director Richard Lloyd, as “a very disappointing outcome”.

“Alder has to resign over this or who else is going to blow the whistle to the FCA?” she asked, adding: “There have been two cases reported already of FCA whistleblowers being mishandled and we know of several others.”

Andy Agathangelou, chair of the Transparency Task Force consumer group, said: “He should probably resign over this, but it almost pales into insignificance compared to all the other bad things the FCA has done recently.

“So many people have blown the whistle to the FCA and ended up paying the price for it.”

The FCA said the two cases were “highly unusual” as both whistleblowers had pursued complaints “over a number of years . . . via various channels, some of which are in the public domain and which were not limited to possible whistleblowing concerns”.

The first whistleblower was dismissed from the regulator in 2021 for alleged misconduct, and also lost an employment tribunal case against the authority, a decision they are appealing against. The concerns the whistleblower raised over alleged opaque hiring practices that were detailed to Alder had prompted an internal review. The second complainant left the FCA “some years ago”.

The FCA added that their recent allegations raised with Alder “for the most part concerned the way in which their allegations had historically been treated”. It added that its review found Alder acted “in the firm belief that there was no realistic prospect of causing harm to them in any respect”.

The regulator also said it was already reviewing its internal whistleblowing process after they were identified as being “somewhat impractical”.

It is rare for the FCA to take enforcement action for whistleblower breaches. In 2018, it joined forces with the Bank of England’s Prudential Regulation Authority to fine former Barclays chief executive Jes Staley £642,430 for trying to find the identity of an anonymous complainant. 

But critics said the investigation into Alder was the latest example of the FCA failing to observe the standards that it expects of those it regulates, and accused it of deterring people from blowing the whistle on frauds.

Gareth Snell, Labour MP and chair of the all-party parliamentary group on whistleblowing, said he was “disappointed that the FCA has failed to understand the significance of its actions”.

“There has to be confidence in every financial service that whistleblowers and those who come forward to expose problems will be protected,” he added.

Mary Inman, lawyer at US firm Whistleblower Partners, said the FCA’s “failure to discipline its chair . . . is both appalling and hypocritical”. She added that the regulator had itself run a campaign promising to protect individual whistleblowers’ identities.

The FCA received 1,124 new whistleblower reports in the year to the end of March 2024 — up from 1,086 the previous year — with around a third of whistleblowers being anonymous.