SITC0024

Written evidence submitted by Protect

About Protect

1. Protect, the UK whistleblowing charity, was established in 1993 and has individually advised more than 50,000 whistleblowers to date.  Protect aims to make whistleblowing work for individuals, organisations, and society. 

2.  Every year, we support around 3,000 whistleblowers who call our Advice Line. In addition, we work with organisations on improving their speak up arrangements and campaign for better legal protection of whistleblowers. 

3. This short submission provides Protect’s response to two of the Treasury Committee’s questions:

• The role of, and progress of, firms, Government and financial regulators in combatting sexual harassment and misogyny in financial services and offering effective ways to escalate concerns about sexual harassment.
• The role of Government and Regulators in ensuring firm cultures, policies and practices support women’s aspirations and progress.

Summary

4. In the Financial Services (“FS”) sector, whistleblowers are encouraged to raise concerns about “non-financial misconduct” which includes sexual harassment.  Protect has seen a rise in the number of cases to its Advice Line on this issue in recent years.  Despite strong rules in the FS sector more work needs to be done by employers and by regulators to demonstrate that action is taken on reports of sexual misconduct raised, and to prevent whistleblowers being victimised when they speak up to stop harm.

What is whistleblowing and why is it relevant to Sexism in the City

5. Whistleblowing is now recognised as a key tool in protecting society against all types of wrongdoing, from corruption to safeguarding, fraud to clinical negligence. Society is no longer debating the value of whistleblowing, but, instead, what cultural changes are needed to ensure that the concerns whistleblowers raise are acted on.

6. This response draws the link between effective whistleblowing arrangements in the financial sector, and the creation of an open culture where incidents of sexual harassment and discrimination can be raised and dealt with.

7. Protect has conducted extensive research into whistleblowing in the financial services sector. In 2012 and 2020 respectively we produced two reports: Silence in the City 1 (“SITC1”) and Silence in the City 2 (“SITC2”) detailing our findings.

8. These reports considered the lived experience of whistleblowing in the financial services sector by pulling trends and themes from written case notes from calls to our free, confidential legal Advice Line to form a picture through statistics of whistleblowers attempts to raise concerns and the response from the employer towards the wrongdoing raised and towards the whistleblower personally.

9. Protect recognises that the concerns considered in these reports are wider than the scope of the Treasury Committee’s call for evidence, in that they are not limited to issues relating to gender disparity, discrimination or sexual harassment at work. The statistics do, however, speak to the wider picture in relation to how firms function, and how they have changed. We believe this paints an important background to the issue of misogyny in the financial sector because it identifies key areas of concern and the importance of openness and transparency in the workplace. It is noteworthy that discrimination and harassment cases formed part of the top six concerns raised by whistleblowers. This is possibly due to the #MeToo movement and reflection of this campaign’s impact on workplace culture.

10. Relevant for the committee is our 2020 report, SITC2, which examined 352 finance sector whistleblowers who contacted Protect for advice between January 2017 – December 2019. This research examined the changes we could see post the introduction of whistleblowing rules introduced in 2017,[1] from the Financial Conduct Authority and Prudential Regulation Authority, when compared to a similar report we published in 2012, Silence in the City. We were interested in seeing if the rules had created a positive change on the culture of whistleblowing in the financial sector.

11. Our 2020 findings were revealing. We identified some real changes from the SITC1 report – with much more awareness and trust by employees in the internal whistleblowing arrangements put in place by employers. This has also been borne out in high levels of knowledge among financial sector workers compared to the average UK worker in YouGov polling.[2]  Workers from the financial sector were 73% more likely to say they were aware there had a whistleblowing policy, compared to the average UK worker score of 43%.[3]

12. But we also found much to suggest that the changes are only superficial. While our sample are whistleblowers who have self-identified as in need of advice, we were shocked to find that still 7 in 10 of those raising concerns were victimised for doing so and a third reported that their concerns were ignored.  This may indicate a danger that many employers see whistleblowing as a tick-box exercise: creating a policy and telling staff about it is easier than ensuring the policy is effective in practice.

Positive Findings:

• There’s more trust among whistleblowers to use internal whistleblowing arrangements. While in SITC1 we found 78% of whistleblowers raised their concerns internally, i.e. with their employers, our new research (SITC2) shows this has significantly increased, to 93%.

•        Our research shows whistleblowers are 10% more likely to raise their concern a second time if required. In SITC1, only 20% of financial services whistleblowers raised their concern a second time, in SITC2 this has risen to 30%.  However, this still suggests that most whistleblowers will not raise their concerns more than once: organisations have a small window of opportunity to respond appropriately when concerns are raised with them.

Negative findings:

• Too many whistleblowers are still suffering from victimisation - our research shows 70% of whistleblowers were either victimised, dismissed or felt resignation was the only option open to them.
• Discrimination and harassment cases form part of the top six concerns raised by whistleblowers.
• 33% of concerns were ignored – a small increase from 30% (SITC1). This shows lessons have not been learned in the sector about responding to whistleblowing concerns and providing feedback.

13. The most notable change in terms of the concerns being raised was how discrimination and harassment cases moved from not featuring in the top six concerns in SITC1 to being 5% of the concerns raised in SITC2.

14. This could have reflected the effect the #MeToo movement had on the sector. This was emphasised - following the Women and Equalities Committee’s last report on sexual harassment in the workplace - when the FCA published a letter[4] to all firms subject to the whistleblowing rules that they, as a regulator, consider a failure in dealing with harassment or discrimination as a regulatory matter as well as an indication of poor culture. Very few other regulators have taken this view.

15. The bullying and harassment cases included in this category will either be situations where a whistleblower has witnessed others being subjected to such behaviour or where they are part of large group of people affected by such behaviour.

16. In other words, whistleblowers are identifying a wider cultural problem in their place of work, rather than reporting a situation where the caller feels that they alone have been personally discriminated against or harassed. Increasingly whistleblowers are raising concerns about systemic cultural issues like harassment and misogyny. This means that it may be more effective for a whistleblower, even if they are also a victim of the harassment or bullying, to use the whistleblowing arrangements because it has this wider public interest significance.

17. Our research found that many whistleblowers were reporting on systemic and organisation-wide problems, which any good employer ignores at their peril. Over 90% reported through internal channels first – it is clear that whistleblowers are giving their employer a chance to put things right by speaking up.[5] Managers, chief executives and boards need to be the drivers of change when it comes to improved whistleblowing culture. 

18. Our findings suggest that effective whistleblowing policies are integral to tackling misogyny and sexual harassment in the financial services sector. 

Ensuring firm cultures, policies and practices support women’s aspirations and progress

19. We note in the House of Commons Treasury Committee’s 2018 Women in Finance report, the emphasis placed on the importance of culture in the workplace. Inculcating a positive speak up culture in an organisation is essential for whistleblowing arrangements to be effective and to ensure that workers feel able to speak up about misogyny, sexual harassment and discrimination in the workplace.

20. The culture that sits behind this is going to be determinative as to whether people feel comfortable using whistleblowing arrangements. We look at a lot of whistleblowing policies and it is surprisingly common for organisations to forget to say that they want people to speak up, not just how to do it. 

21. There are a number of further benefits to a healthy speak up culture:
• Deter wrongdoing as staff will be deterred from malpractice if they know they will be held accountable for their actions.
• Detect wrongdoing at an early stage rather than letting the problem escalate to a major one.
• Aid good management: a good culture sees managers appropriately trained. As they will commonly be the first point of call for raising concerns, staff will feel confident in speaking up.
• Demonstrate accountability: an organisation that has an environment where staff feel safe to raise concerns, and where issues are resolved efficiently, will maintain a good reputation.
• Improves staff wellbeing, loyalty and productivity: confidence in their employer to tackle wrongdoing improves workplace morale, employee retention and productivity

22. At Protect we work with many financial services employers who understand the value of whistleblowing and strive for best practice in this area. We hope that a better understanding of the importance of effective whistleblowing arrangements will inform the Treasury Committee’s recommendations.

The role of regulators: the FCA example

23. FCA are a good example of how regulators are taking the issue of non-financial misconduct more seriously. Regulators are putting increasing importance on issues like sexual harassment which can be indicative of an organisation’s culture, as well as the fitness to practice of certain individuals. The FCA expects to be notified of ‘reportable concerns’. These are far wider in scope and content than many other regulator’s interests. SYCY 18 of the FCA’s handbook sets out that:

“A firm must establish, implement and maintain appropriate and effective arrangements for the disclosure of reportable concerns by whistleblowers.”

Reportable concern:

“A concern held by any person in relation to the activities of a firm, including:

(a) anything that would be the subject-matter of a protected disclosure, including breaches of rules;

(b) a breach of the firm’s policies and procedures; and

(c) behaviour that harms or is likely to harm the reputation or financial well-being of the firm”

24. Organisations regulated by the FCA are also required to maintain an open and cooperative relationship with them, as well as disclosing appropriately anything relating to the firm of which the FCA would reasonably expect to be notified.

25. Organisations are also expected to demonstrate that they have the right processes in place to handle and escalate such cases appropriately including internal whistleblowing and complaints processes.  This includes the creation of a Whistleblowing Champion at a senior managerial level to oversee the whistleblowing arrangements.  But, where these roles are given to a non-executive director, as they are not considered a worker under employment law, this means they are not protected by the whistleblowing protection law the Public Interest Disclosure Act 1998. It would be a benefit to the sector if this change was made to the law.
26. This means that issues relating to misogyny, sexism, sexual harassment are all concerns that the FCA could take regulatory action over. Individuals can raise sexual harassment issues directly with the FCA through their whistleblowing procedures. Protect endorses this approach.

27. However, data suggests that enforcement actions against senior managers is limited:  only 4 enforcement investigations into non-financial misconduct were undertaken between 2016 and May 2022 along with 10 “Threshold Conditions” investigations[6] .

28. As the FCA acknowledges in its report: Whistleblowing Qualitative Assessment Survey 2022[7] there is room for improvement in how it provides feedback to the whistleblowers who contact them, and that there is a perception from whistleblowers that the FCA is reluctant to act.  Of the 1,041 whistleblowing disclosures received by the FCA between April 2021 and March 2022, 801 were still under assessment in April 2022.  Action had only been taken in 99 cases, and significant action only in 3[8].

29. For whistleblowers to raise concerns, including about sexual and non-financial misconduct with their regulator they need to be confident that action will be taken, and feedback to whistleblowers is an important way to provide this reassurance.  

September 2023