Financial Times, Katie Martin and Caroline Binham, 17 August 2018
Whistleblower protections at Royal Bank of Canada are under scrutiny by the UK’s Financial Conduct Authority, after a former trader at the bank won his case for unfair dismissal and at least five more potentially similar cases came to light.
The London-based RBC staff involved claim to have been dismissed without due process after highlighting legal and compliance problems across a range of businesses in cases spanning several years, multiple people familiar with the matter told the Financial Times.
The FCA scrutiny comes at a time when the regulator is keen to demonstrate it takes the treatment of whistleblowers seriously. In May, it imposed an unprecedented fine on Barclays chief executive Jes Staley after he tried to uncover the identity of a whistleblower. He became the only chief executive of a major financial institution to be fined by the FCA and keep his job.
“Whistleblowers play an important role in exposing poor practice in firms and they have in the past few years contributed intelligence crucial to action taken against firms and individuals,” the FCA said in a statement while declining to comment on the nature of its inquiries into RBC.
“It is in the interests of the industry and regulators alike that wrongdoing is identified and addressed promptly. For individuals to have the confidence to come forward, it is vital that firms have in place adequate policies on dealing with whistleblowers and that a senior manager takes responsibility for overseeing these policies,” it added.
The interest in RBC comes after John Banerjee, once the head of emerging markets currency trading at the bank in London, won a tribunal case for unfair dismissal in May. Mr Banerjee successfully argued that the bank had fired him unfairly after he drew attention to a “box-ticking” compliance culture. The judge in the case described the bank’s actions as “egregious”. The bank is appealing the case.
RBC declined to comment. After Mr Banerjee’s tribunal, however, it said it took its duties as an employer “very seriously” and was "reviewing the judgment carefully to see whether there are any practical steps it should take to make improvements to any employment processes".
The FCA rarely concerns itself with individual tribunal cases. But one person familiar with the regulator’s thinking said it is interested in exploring potential patterns of poor behaviour in the treatment of whistleblowers.
No suggestion has been made that RBC has a more serious problem in this regard than any other bank. However, concern about how whistleblowers are treated has reached the highest levels of the FCA. Andrew Bailey, its chief executive, has met Georgina Halford-Hall, the head of campaign group Whistleblowers UK, to discuss potentially suspect patterns of departures of individuals who have raised compliance issues at a number of banks, including RBC.
The FCA still has some way to go to convince bystanders that it is tough on poor treatment of whistleblowers. Many criticised it for not banning Mr Staley over what was a test case of tough new rules that aim to hold top management accountable for failings on their watch.
The regulator received 1,106 whistleblowing reports in the 2017-2018 financial year. That is more than the previous year’s 900, but still well below the 1,340 recorded in 2015-2016. Of the 1,106 disclosures made in the last financial year, the FCA is taking further action in 121 cases. It is assessing a further 128 disclosures, according to its annual report published last month.
Whistleblowers are often very aware of the risks of talking to regulators. “While people are encouraged to come forward by the FCA, you really need to think twice or three times before speaking with them,” said one employment lawyer who represents both traders and banks. “They can’t guarantee anonymity, or that your name somehow won’t come out as the investigation progresses; even with the best of intentions, it’s often very obvious who a whistleblower is. And a bank really won’t touch you once it knows you’ve blown the whistle.”
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Whistleblower protections at Royal Bank of Canada are under scrutiny by the UK’s Financial Conduct Authority, after a former trader at the bank won his case for unfair dismissal and at least five more potentially similar cases came to light.
The London-based RBC staff involved claim to have been dismissed without due process after highlighting legal and compliance problems across a range of businesses in cases spanning several years, multiple people familiar with the matter told the Financial Times.
The FCA scrutiny comes at a time when the regulator is keen to demonstrate it takes the treatment of whistleblowers seriously. In May, it imposed an unprecedented fine on Barclays chief executive Jes Staley after he tried to uncover the identity of a whistleblower. He became the only chief executive of a major financial institution to be fined by the FCA and keep his job.
“Whistleblowers play an important role in exposing poor practice in firms and they have in the past few years contributed intelligence crucial to action taken against firms and individuals,” the FCA said in a statement while declining to comment on the nature of its inquiries into RBC.
“It is in the interests of the industry and regulators alike that wrongdoing is identified and addressed promptly. For individuals to have the confidence to come forward, it is vital that firms have in place adequate policies on dealing with whistleblowers and that a senior manager takes responsibility for overseeing these policies,” it added.
The interest in RBC comes after John Banerjee, once the head of emerging markets currency trading at the bank in London, won a tribunal case for unfair dismissal in May. Mr Banerjee successfully argued that the bank had fired him unfairly after he drew attention to a “box-ticking” compliance culture. The judge in the case described the bank’s actions as “egregious”. The bank is appealing the case.
RBC declined to comment. After Mr Banerjee’s tribunal, however, it said it took its duties as an employer “very seriously” and was "reviewing the judgment carefully to see whether there are any practical steps it should take to make improvements to any employment processes".
The FCA rarely concerns itself with individual tribunal cases. But one person familiar with the regulator’s thinking said it is interested in exploring potential patterns of poor behaviour in the treatment of whistleblowers.
No suggestion has been made that RBC has a more serious problem in this regard than any other bank. However, concern about how whistleblowers are treated has reached the highest levels of the FCA. Andrew Bailey, its chief executive, has met Georgina Halford-Hall, the head of campaign group Whistleblowers UK, to discuss potentially suspect patterns of departures of individuals who have raised compliance issues at a number of banks, including RBC.
The FCA still has some way to go to convince bystanders that it is tough on poor treatment of whistleblowers. Many criticised it for not banning Mr Staley over what was a test case of tough new rules that aim to hold top management accountable for failings on their watch.
The regulator received 1,106 whistleblowing reports in the 2017-2018 financial year. That is more than the previous year’s 900, but still well below the 1,340 recorded in 2015-2016. Of the 1,106 disclosures made in the last financial year, the FCA is taking further action in 121 cases. It is assessing a further 128 disclosures, according to its annual report published last month.
Whistleblowers are often very aware of the risks of talking to regulators. “While people are encouraged to come forward by the FCA, you really need to think twice or three times before speaking with them,” said one employment lawyer who represents both traders and banks. “They can’t guarantee anonymity, or that your name somehow won’t come out as the investigation progresses; even with the best of intentions, it’s often very obvious who a whistleblower is. And a bank really won’t touch you once it knows you’ve blown the whistle.”
