Whistleblowing in Mayfair

21 April 2015

Whistleblowing cases have frequently hit the headlines recently and often they involve the Financial Services Sector.  Public Concern at Work, the whistleblowing charity, conducted a survey of whistleblowers within the financial services sector between 2007 and 2012.  They found that whistleblowing in the financial services sector can be more challenging than in any other sector and that it was more likely that whistleblowers would be sacked.  Public Concern at Work found that the concerns that whistleblowers raised often related to:

  • Fraudulent / criminal activity;
  • Miss-selling; and
  • Breaches of legal or regulatory obligations.

Worryingly, they also found that most of the whistleblowers that they surveyed thought that nothing had been done to address their concerns.

Rather than make you trawl through the Financial Conduct Authority’s own guidance (useful though it may be) we have summarised what it means to be a whistleblower, and what protection whistleblowers have; as well as taking you through a surprising new case.

What type of disclosure is protected?

A whistleblowing disclosure is known as a ‘protected disclosure’.   Not all disclosures are protected: to be protected, the worker or employee must reasonably believe that what they are saying is true and in addition, the disclosure must; firstly be in the public interest and; secondly the disclosure must be something that shows that:

  • A criminal offence has been committed (or is likely to be committed);
  • A person is failing or is likely to fail to comply with any legal obligation to which he/she is subject;
  • That an individual’s health or safety has been, or is likely to be, endangered;
  • That a miscarriage of justice has, or is likely to, occur; or
  • That any of the above matters has been, or is likely to be concealed.

Whether or not a disclosure is in the public interest is a very important matter.  For example, disclosures will not be protected if they just show that the whistleblower’s own contract has been breached, unless this is also in the public interest.  A recent case highlights how this will be assessed, as set out below.

Who can you tell?

If you are an employee then the law will generally only protect you if you make the disclosure to your employer.   However, the financial services industry is regulated by the Financial Conduct Authority and employees can make a disclosure (made in good faith) directly to the Financial Conduct Authority as it is a ‘prescribed person’.

In certain very limited circumstances an employee or worker will be protected if they disclose to people other than their employer or, for example, the FCA but do take advice first.

How is an employee or worker protected?

A worker or employee cannot be subjected to a detriment by an employer on the basis that they have made a protected disclosure.   Similarly, if an employee or worker is dismissed because they made a protected disclosure, then they will be able to claim that their dismissal was automatically unfair.

A Recent Case – when is a disclosure in the public interest?

Chesterton Global Ltd (t/a Chestertons) and Ors v Mr M. Nurmohamed UKEAT/0335/14/DM:  this case was about Mr Nurmohamed, who was a Director of the Mayfair office of Chestertons, the well-known estate agents.  He made three disclosures about misstatements about the company’s costs and liabilities, which he said, affected the earnings of 100 senior managers, including himself.   The Employment Tribunal said that the whistleblowing disclosures were protected, because Mr Nurmohamed had made the disclosures, reasonably believing that they were in the interest of the 100 senior managers, which was a sufficiently large group of the public to make the disclosure a public interest matter.

Chestertons did not like this result and they appealed, but lost.  On appeal, the appeal court decided that the question of whether a whistleblowing disclosure was in the public interest or not was not a strictly objective question.  Instead, the question was whether the person making the disclosure reasonably believed the whistleblowing disclosure to be in the public interest.  It meant that Mr Nurmohamed’s whistleblowing disclosure was in the public interest, because he reasonably believed it to be, and it did not matter that the person that Mr Nurmohamed was most concerned about, was himself.

The moral of this tale is that it is going to be quite simple for employees and workers to show that their disclosures are in the public interest, even where this is not immediately obvious.

How can we help?

If you are an employee, we can give you guidance on how to whistleblow, who to tell and how to respond if an employer reacts negatively to the disclosure.

If you are an employer, we can help to encourage your staff to whistleblow internally rather than telling the FCA or the newspapers about their concerns, by implementing pragmatic internal whistleblowing policies and procedures.  We always recommend that you tell whistleblowers what steps you are taking as a result of their disclosures as this ensures that the whistleblower feels valued and is less likely to report the matter externally.

If you would like to discuss this further, please contact us on 0203 178 5360 or email us by clicking here.