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We are pleased to see the Government give reassurance to whistleblowers raising concerns about Furlough Fraud.  Neither the proposed powers (in the Finance Bill) to recover money paid illegally through the scheme (formally called the Coronavirus Job Retention Scheme) nor fraud charges will be levelled at those who raise these concerns.

Background

Furlough fraud makes up 59% of the 510 Corona Virus related cases we’ve taken on the Advice Line since March 23rd.

HMRC have also seen thousands of concerns on the issue raised through their secure reporting channel.  A key area of advice whistleblowers ask for time and time again is their own liability if they are forced to work while being Furloughed.

We have previously written about how the typical Furlough Fraud situation revolves around the employer either asking or threatened employees to volunteer, help or just work while being part of the scheme.  This puts the employees in an almost impossible position where they have no power over the decision to be part of the scheme, and often little chance to refuse to work, as otherwise they may be fired or made redundant.

Whistleblowers publicly reassured

After sharing our concerns with Lord Wills he asked a Parliamentary question seeking reassurances that whistleblowers will not be pursued to repay illegal payments or prosecuted for fraud should they work while be furloughed. Lord Agnew of Oulton answering for the Government said:

‘In cases of fraudulent claims in respect of the Coronavirus Job Retention Scheme, HMRC will seek to recover funds from the claimant employer.

Using powers that are before this House in the Finance Bill, where the employer is an insolvent company and an individual with management responsibility knowingly made an excessive claim, HMRC will be able to seek to recover funds from that individual.

Whistleblowers can be confident that HMRC will act to protect their confidentiality, and that they will not be liable for recovery. This does not include cases where the employer and employee conspire to defraud the scheme.’

The Government reassurances to whistleblowers, matches a similar commitment made to directors namely that honest mistakes would not be punished - prosecution will be focused instead on those who act dishonestly.   It appears that the Government’s statement means that Furloughed workers who raise concerns about their employer forcing them to work while being part of the scheme will not be pursued for the money paid to them.  It is the employer who commits the fraud, the employer who receives the payment, and the employer who should suffer any penalty.

Lord Agnew’s last point reminds employees that the act of whistleblowing does not protect them against any prosecution for their own wrongdoing.  There may be cases where employees are working with employers to defraud - but these are not the employees calling us.  We trust that whistleblowers who are working under threats from their employers will not be treated as co-conspirators. We would welcome clarification that anyone who raises a concern – whether internally with their employer, or externally with HMRC – will be exempt from any conspiracy charge.

More to do

We would now like to see HMRC commit to reopening the telephone reporting service so that whistleblowers looking to Speak Up about Furlough fraud can get reassurance from HMRC and information on the process.  This is especially important given the changes that have now taken place with the scheme which serves to increase the complexity of the arrangements.


Covid-19 is exposing good and bad practice when it comes to sectors who put employee welfare first and foremost. Unsurprisingly, retail is not leading the way, as highlighted by the quite shocking reports of working conditions of Boohoo suppliers in Leicester.

As the UK’s whistleblowing charity, we advise workers from all sectors. At the start of the pandemic our Advice Line was getting calls largely from health and care workers over issues such as lack of PPE, and carers being forced to go into work when unwell, but the majority of our calls have been over furlough fraud from the retail and hospitality sector – industries we did not have much engagement with pre-Covid-19.  The two sectors have made up 21% of 510 calls we have received regarding Covid-19 related concerns. [1]

Labour Behind the Label, who campaign for workers’ rights in the clothing industry, in its recent  report Boo-hoo and Covid-29, People behind the profit  say they too have received reports from workers alleging furlough fraud, as well as low wages, modern slavery, illegal opening of factories during lockdown and illegal denial of wages and benefits in Boohoo and other e-retailers. Worryingly, the report also states: ‘We have also heard of workers – positive for COVID-19 – being required to work throughout their sickness in order to fulfil orders…..  We have heard of several incidents, whereby workers who had tested positive were told to come into work, and of managers telling workers not to tell anyone else about positive cases.’

Big retail companies with healthy profit margins are in a position where they should be setting standards in terms of best practice, including whistleblowing.  This would mean insisting on having whistleblowing arrangements. So why isn’t it happening?

Good whistleblowing arrangements should apply not just to the employer, but also to workers in their supply chains.  If supply chain workers are comfortable to raise concerns, companies will benefit from being better informed about risks within the chain itself.

Responding to concerns raised in the supply chain e.g. reporting breaches of minimum wages, and modern slavery incidents is difficult.  Organisations will have to weigh up discussing the issues with the supplier/s or (as in the case of modern slavery incident) reporting it to an external body such as the police.  A particular difficulty lies in how to protect an individual whistleblower who raises concerns with them. A manufacturer who has received concerns from a supply worker who is not a direct employee, may find they are limited in what they can do in response to a worker being victimised for speaking up. The response we would encourage is for the large retailer to no longer work with suppliers who they credibly believe bend the rules. But brand, reputation and even profit aside, retailers need to ask themselves if it is morally acceptable on a basic human rights issue for retail manufacturers to turn a blind eye? With the public becoming so aware of basic human rights issues, as seen with #MeToo, BLM, we should all care about the real cost of fast fashion.

Encouragingly, there are some good examples of best practice in the area of supply chains. Shift is a non-profit centre for business and human rights practice, that works in collaboration with the Global Social Compliance Programme (GSCP), a business-driven program for the continuous improvement of labour and environmental conditions in global supply chains.

In its report, From Audit to Innovation: Advancing Human Rights in Global Supply Chains, Shift identifies many best practice examples as below:

Both H&M and Marks & Spencer are working with suppliers in China and Bangladesh in order to develop their management systems to track and analyse employee working hours – which can then provide the data for further analysis, operational efficiencies, and reductions in those working hours to acceptable standards

One H&M manager describing most audit processes as a ‘game of hide and seek’, during which suppliers did everything possible to hide problems from the company. The company had grown quite discouraged by the results of its audit program: while audits were catching the small infractions, they were missing the bigger picture issues; the program was failing to produce improvements over time; and its supplier base seemed uncommitted to making those improvements. Driven by a desire to create greater transparency, ownership and commitment from its suppliers, H&M’s new system is based on a philosophy of continuous improvement. The company conducts fewer audits, but the audit of each supplier is much more in-depth, lasting 6 days. The end result of each audit is a jointly developed 18-24 month workplan, based on shared prioritization of issues for improvement. Rather than conducting periodic follow-up audits, H&M follows up on progress made on the workplan. Suppliers have reported to H&M that ‘they now feel listened to, rather than just accused’, and that they now feel they ‘get credit for what they are getting right, not just what they are doing wrong.

Labour Behind the Label want the Government to ‘recognise that it is not only unscrupulous suppliers but also the lack of regulation of pricing and purchasing practices.’

Protect are calling on the Government to press ahead with a new Single Enforcement Body (SEB). The Government have committed to a (SEB) to protect worker’s employment rights with the powers to enforce 'the minimum wage, labour exploitation and modern slavery, along with holiday payments for vulnerable workers and safeguarding agency workers' which was announced with a consultation last year, which Protect responded to. Currently, enforcement is piecemeal and can be ineffective, meaning that neither workers nor compliant employers are well served.

The SEB should be made a ‘prescribed person’, as many regulators already are, including the Care Quality Commission, the Financial Conduct Authority, and the National Audit Office among many others.[2] This would enable those raising whistleblowing concerns to be protected from unfair dismissal for approaching the SEB. This measure would help to increase workers’ confidence in raising concerns by giving them enhanced legal protection.

Legislation has not been introduced so far, but the SEB is part of as part of the Government’s Good Work Plan. Protect will continue to push for the SEB to be brought in.

[1] The data ran from start of lockdown 23rd March 2020-3th July 2020.

[2] 43F of the Employment Rights Act 1996.

By Andrew Pepper-Parsons


In March of this year, the Chancellor of the Exchequer Rishi Sunak announced the creation of the Coronavirus Job Retention Scheme (‘CJRS’). Protect’s Advice Line rapidly saw a spike in reports of “furlough fraud”, and, at the time of writing, handling nearly 300 calls with HMRC receiving 4,500 reports of fraud from whistleblowers[1].

This level of activity has thrown the question of rewards schemes for whistleblowers back into the arena, with some advocating that where a whistleblower speaks up about furlough fraud (or any public interest wrongdoing), they ought to receive a financial reward.[2]

The U.S. Securities and Exchange Commission (the SEC), an independent agency of the US Federal government operates such a scheme, under the Dodd-Frank Act 2010. However, whilst whistleblower rewards schemes may seem like an attractive proposition, the Dodd-Frank model is unworkable in most sectors, and inconsistent with the public interest served by the whistleblower’s disclosure. Indeed, for most whistleblowers, rewards are the last thing on their mind when they take the decision to speak up.[3]

The Dodd-Frank Model used by the SEC

 The SEC scheme is only available to tiny percentage of those who speak up.

 Only whistleblowers who provide:

  • Original information
  • Leading to successful enforcement action
  • Of over $1 million

May apply for an award of 10-30% of the sanction imposed.[4]

The reasoning behind this reward scheme is almost entirely a small number of large payouts; proponents point to the large payouts for big scandals as evidence of success.[5] Since 2011, the SEC recovered $2 billion because of whistleblower tips and, in 2019, it awarded approximately $60 million to eight individuals.[6]

However, it does not follow that reward schemes are a sensible legislative proposal simply because the SEC scheme sometimes results in headline- grabbing figures. Kevin LaCroix, an attorney and Executive Vice President of RT ProExec, has specifically highlighted the huge disconnection between the number of reports (5,212 during FY 2019) to the SEC and the small number of awards (eight during FY 2019). LaCroix goes on to say, ‘When I look at the fact that of the total number of reports the agency has received 99.98 percent have not resulted in awards makes me wonder whether this program is really worth it?’[7] This view is supported by  the FCA’s research into US financial incentives. The FCA concluded, ‘ Incentives in the US benefit only the small number whose information leads directly to successful enforcement action resulting in the imposition of fines (from which the incentives are paid). They provide nothing for the vast majority of whistleblowers. There is as yet no empirical evidence of incentives leading to an increase in the number or quality of disclosures received by the regulators’.[8]

The Size of the Catch

The whistleblowers who call Protect’s Advice Line are rarely raising concerns about fraud or financial mismanagement of such magnitude; but they often raise concerns about fraud which significantly impacts the public interest. Key public and voluntary organisations are often run on a shoestring, yet provide invaluable support for the communities they serve. For them, the difference between success and failure can be a just few thousand pounds. How can it be right that whistleblowers who raise valid and genuine concerns about fraud, which do not fall within the remit of the SEC reward scheme, be left disregarded and unacknowledged?

Whistleblowing of any concern can have immeasurable and difficult consequences for the individual. This is important, as if the reporting of less severe misconduct is made less attractive, there is a risk that disclosures could be delayed, manipulated or artificially inflated.[9]

Non-Financial Sectors left out in the cold

Little attention has been paid to how reward schemes could operate in any other sector than the financial. Blowing the whistle on financial wrongdoing often exposes a pool of money; from which a ’finder’s fee’ reward can be calculated. However, reporting wrongdoing in other sectors does not often generate funding, and does not provide a comparable source for rewards.

For example, a doctor who raises concerns about patient safety cannot point to any recovered sum of money from which they should be rewarded. How then is a reward to be calculated? The sacrifices of whistleblowers in non-financial sectors are just as real, and it is difficult to justify a scheme that excludes the hospital whistleblower, or the teacher who reports a safeguarding incident, or the factory worker who raises unsafe food practices.

 Awards vs. Compensation

Rewards schemes are not compensatory, as the reward is not based on any detriment suffered by the whistleblower. In the UK, detriment is addressed through the Employment Tribunal, where compensatory payments to the whistleblower can be uncapped.  If rewards schemes were compensatory this would create a dual-system and an unsatisfactory state of confusion. Efforts should be made to improve the efficiency and robustness of the Tribunal system, rather than focusing on ‘quick-fix’ solutions.

Under the Dodd-Frank Model, rewards are calculated based on the financial value of the information, not the damage the whistleblower suffers; or the value which the information has to the public interest. As such, these schemes do not put the whistleblower or the public at the heart of the process. Whistleblower Wendy Addison, who offers consultation and training to organisations, aptly describes this as treating whistleblowers as a “hired gun for the SEC”.[10]

Whistleblower reward schemes maybe appealing because for complex financial cases there is the opportunity of both their legal costs being paid and the whistleblower being adequately compensated.  Making it more attractive for lawyers to assist whistleblowers is positive, given the disparity of arms that claimants face in tribunal.  As costs are rarely awarded against the losing party in employment tribunals, whistleblowers may succeed in tribunal, but find their compensation swallowed up in legal fees.  Yet there are many sectors where the wrongdoing exposed by whistleblowers carries no financial fine (e.g. the Oxfam sexual exploitation whistleblowing scandal) where fines are not appropriate, therefore awards scheme have little value.  A better response to a lack of support for whistleblowers within the legal process is to provide them with access to funding, for example through legal aid.[11]

A fundamental principle of whistleblowing is upholding the public interest in every workplace, in every sector. The facilitation of rewards under the Dodd-Frank model does not reflect the value of the public interest, nor the harm suffered by the whistleblower – only the size of the catch they bring in.

Whistleblowers tell us the real reason they speak up is not driven by a cash reward incentive, but because it is the right thing to do and we should all be grateful this is the case.

By Protect Adviser Kyran Kanda, July 2020

[1] https://www.itv.com/news/2020-07-01/exclusive-4500-whistleblower-complaints-as-bosses-force-furloughed-staff-to-work

[2] https://challenge.globallegalhackathon.com/gallery/5ec8290d136ce600448b0dc4

[3] P.g.5 point 12, Financial Incentives for Whistleblowers, July 2014

[4] https://www.sec.gov/whistleblower

[5] https://fcpablog.com/2015/12/03/gordon-schnell-yes-we-need-whistleblower-rewards/#comment-1286

[6] A list of recent rewards can be found here https://www.sec.gov/news/pressreleases.

[7] https://www.dandodiary.com/2019/11/articles/whistleblowers/sec-whistleblower-reports-and-awards-continue-at-elevated-levels/

[8] https://www.fca.org.uk/publication/financial-incentives-for-whistleblowers.pdf

[9] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2822313.

[10] http://www.speakout-speakup.org/blog/whistleblowers-need-radical-justice-not-radical-incentives/

[11] See Protect’s legal reform campaign: https://protect-advice.org.uk/campaign-for-a-new-whistleblowing-bill/


Protect with the support of Slater & Gordon Lawyers has launched Silence in the City 2 (SITC2 2020), a new report examining whether whistleblowing culture within financial services organisations has improved following the introduction of Whistleblowing Rules by the Financial Conduct Authority (FCA). This blog will examine what employers can learn from the research.

Background: Whistleblowing Rules in the Financial Services

Since 7 March 2016, FCA has required regulated organisations to take a number of steps to develop their whistleblowing arrangements. SYSC 18 (also known as “the Whistleblowing Rules”), sets out minimum requirements for firms in a number of areas including the form internal whistleblowing arrangements should take as well as providing non-binding guidance to aide in the implementation of the rules. This research examined whether rules have made it easier for whistleblowers to raise concerns, improved the response to the wrongdoing raised and whether whistleblowers are treated better in the process.

For background here is a summary of the relevant rules for this research:

  • The appointment of a whistleblowers’ champion to oversee the effectiveness of the whistleblowing arrangements (SYSC 18.4.4)
  • Introduction of internal whistleblowing arrangements to handle all types of reportable concerns
  • A requirement to provide training for all staff and for managers receiving concerns (SYSC 18.3)
  • Communication to UK-based employees about the FCA and PRA whistleblowing services (SYSC 18.3.6)

Protect and Slater & Gordon conducted Silence in the City in 2012 (SITC 2012) to uncover the true experience of whistleblowing in the financial services sector. Our new Silence in the City 2 report (SITC2 2020) examines the lived experience of 352 whistleblowers who approached Protect for advice between January 2017-2019. SITC2 2020 directly compares these findings to those of the SITC 2012 report and examines whether whistleblowing culture has improved post implementation of the Whistleblowing rules.

Culture Change

The research has shown some real culture change in the sector which includes:

  • Greater trust and use of internal whistleblowing arrangements: Use of internal arrangements (including disclosures to line managers, Whistleblowing Champion, Directors, Chief Executive) has increased by 15% since our research in 2012, jumping from 78% (from SITC 2012) to 93% (SITC 2 2020).
  • Increased awareness of internal arrangements: 93% of whistleblowers were aware of their employer’s whistleblowing policy and 78% said they had either used the policy or were considering using it. This may be indicative of training that firms are required to provide to staff on how and where to blow the whistle (SYSC)
  • Whistleblowers are more persistent in raising their concerns: We saw a 10% increase in individuals trying to raise their concerns a second time if needed.[1]

Another aspect of the research that should give firms pause for thought is the rise in discrimination and harassment concerns being raised through the whistleblowing channels. 19% of the disclosures made related to legal or regulatory breaches and discrimination or harassment issues which made up 5% of the concerns raised, in 2012 discrimination and harassment did not feature at all in the research. We believe this could be a result of the increased profile such issues now have thanks to the #MeToo movement and steps that the FCA has taken in treating sexual harassment as a conduct issue under the SMCR regime[2]. It also reflects a situation where it might be more effective to use whistleblowing arrangements rather than grievances where the whistleblower is either a witness to the behavior or if they are victim but part of a wider cultural problem in their organisation.

The Gap between policy and practice

While SITC2 2020 demonstrates that firms have taken steps to put in place whistleblowing arrangements, the findings clearly show the void between what is written in the policy and the response from the firm.

  • 7 out of 10 whistleblowers experienced some form of victimisation: this includes bullying and harassment from managers or co-workers, suspension, dismissal or resignation
  • Most employers took no action to resolve victimisation: the research also shows that when the victimisation was reported to the employer, over half took no action (58%) and almost a quarter rejected the complaint (24%)
  • A third of whistleblowing concerns raised were ignored: in 33% of cases, the whistleblowers stated that the wrongdoing they raised was ignored by the employer.

SITC2 2020 mirrors findings found in the US where a recent study by George Washington University and the University of Utah examined nearly two million whistleblower reports from internal whistleblower systems. Report author Kyle Welch said, “If you have more reports, it is a good sign. It is very easy to lower reports, just change the hotline phone number and don’t tell anyone. The question you should ask when you have more reports is: Do we have enough resources to investigate the volume of information we are getting?”  Welch also advises companies to “benchmark your system for the volume of reports you receive. The only way to know if you are receiving enough reports is to get a benchmark study to see how similar firms in your industry did over the same time.”[3]

By failing to properly engage with the victimisation of whistleblowers, some of the positive cultural change we have seen around the use and trust of internal whistleblowing arrangements has been greatly undermined.

Conclusion – 4 things firms should consider doing

The advent of the whistleblowing rules has brought about positive change in the financial services sector, but firms have a long way to go to meet best practice in handling whistleblowers. It is important that senior leaders, championing a firm’s whistleblowing arrangements, put themselves in the shoes of a whistleblower and think about the protection and support they would want as a whistleblower. As firms move to bridging the gap between policy and practice, there are for things that they can consider doing:

  • Treat complaints of victimisation seriously and consistently: adopt a zero-tolerance approach to the victimisation of whistleblowers and ensure that complaints are dealt with through a consistent process. In larger organisations, you may want to address all complaints of victimisation through one central function (e.g. the whistleblowing team or HR) to ensure consistency. Make sure managers across your organisation, HR, the Whistleblowing champions are trained and are aware of what constitutes victimisation.
  • Discrimination and harassment issues maybe raised via whistleblowing arrangements: HR departments and managers need to be aware that whistleblowers appear to be using whistleblowing arrangements to raise discrimination and harassment issues so they must be able to spot when there is a cultural problem within a department or where there is pattern of behavior from one particular individual.
  • Benchmark and review: following the Whistleblowing Rules will not ensure firms have effective whistleblowing arrangements, review and benchmarking of arrangements will show gaps in way whistleblowers are dealt with in the whistleblowing system. Protect has developed a Benchmark framework to help your organisation reach best practice when it comes to whistleblowing standards.
  • Being proactive in communicating to whistleblowers: Whistleblowers feel ignored, communicate and seek feedback from whistleblowers telling them what action has been taken on the concerns and asking they feel victimised for raising the concerns. Being proactive in communicating with whistleblowers is key.

 

 

[1] 20% raised their concerns a second time in SITC1 while it stands at 30% in SITC2.

[2] https://www.parliament.uk/documents/commons-committees/women-and-equalities/Correspondence/180928-FCA.pdf

[3] https://www.forbes.com/sites/josephbrazel/2020/06/11/study-provides-new-insights-about-internal-whistleblowing/


Local government procurement is big business, and in England alone costs the taxpayer £55 billion a year[1]. Even more staggering is the amount lost to fraud each year which is estimated to be between £275 million and £2.75 billion[2].

A recent report by the Ministry of Housing, Communities & Local Government Department, in line with the UK Anti-Corruption Strategy 2017 – 2022, highlights the huge impact whistleblowers have in identifying and deterring fraud, stating: The majority of cases of fraud and corruption relating to procurement come to light as a result of someone making a report or raising a concern”.

Fraud in public services isn’t just about money, it can mean that public safety is put at risk; or lead to the closure of vital services – when there simply isn’t enough funding to go around. Last year, 5% of the calls for advice received by Protect were in relation to concerns about local government.

The overarching recommendation from the report is that organisations should develop a compliant culture where whistleblowing is supported.

John Penrose MP states in the report foreword:

“The only constants are the need to bake in a counter fraud and corruption culture from top to bottom of every Council, so whistleblowers know they will be supported rather than victimised, and wrongdoers know there’s a good chance they’ll be caught and punished too.”

However, despite recognising that more must be done to support and protect those who raise concerns, the report is silent on what reforms to the Public Interest Disclosure Act 1998 could be considered to advance this objective.   The report states: “The Government continues to listen to stakeholders and will review the recent reforms once there is sufficient evidence of their impact.”

Protect say it will be difficult to gauge impact, when the recent reforms aren’t even enforced and Protect’s Policy Officer Laura Fatah said, “Victimisation of whistleblowers is rife, and individuals who speak up in the public interest must know they can rely on the law to protect them in times of need. Protect will continue to urge the government to reform the current legislation, highlighting the cracks that whistleblowers are falling through, and the desperate need for mandatory standards to be established for both employers and regulators.”

See full details of Protect’s legal reform campaign.

The report presents some interesting findings in relation to whistleblowing:

  • Of the 86 councils responding to the survey as part of this review, 23% reported having experienced cases of fraud and corruption within procurement in the 2017-2018 financial year
  • Whistleblowing and tip-offs: are often the source of procurement related cases. More needs to be done to encourage individuals to come forward, including from the supplier side
  • Many cases of fraud and corruption that impact procurement are discovered as a result of a whistle blower coming forward or someone raising a concern. If whistleblowing arrangements were strengthened across the board, this could encourage more individuals and business to come forward to raise their concerns
  • More needs to be done across the board to encourage individuals to come forward and to protect them from harm afterwards. Concerns may be raised by staff members, suppliers, or other individuals. To encourage reporting by these individuals, the channels available need to be accessible and both confidential and perceived to be confidential

The report found council’s particularly vulnerable to fraud and highlighted the following: 

  • Suppliers are often relied upon to provide progress reports and data to support their delivery against KPIs, sometimes self-certifying that results have been achieved and payment is due. Without appropriate oversight and monitoring by councils, this can be abused
  • The impact of deterrence needs to be taken into account, as without the threat of punitive action, council’s risk being perceived as a soft target
  • Often there is no incentive to take legal or civil action if funds have been recovered. This approach may present councils as a ‘soft touch’ where the worst sanctions is the return of funds by a supplier

If you are a local authority seeking to improve your whistleblowing arrangements and reduce the risk of fraud, you can call our business team for a confidential consultation on 020 31172520, pressing option 2, or via email business@protect-advice.org.uk

[1] National Procurement Strategy for Local Government in England 2018, LGA, page 5 https://www.local.gov.uk/national-procurement-strategy-local-government-england-2018

[2] Cabinet Office Cross-Government Fraud Landscape Annual Report 2018 https://www.gov.uk/government/publications/cross-government-fraud-landscape-annual-report-2018

 

 


Whistleblowing charity Protect is calling for the Charity Commission to introduce whistleblowing rules or regulations for the sector, following serious failings at the Royal National Institute of Blind People (RNIB) – which the watchdog has called ‘one of the worst examples of poor governance and oversight having a direct impact on vulnerable people’.

The Commission has issued an alert to all large complex charities about the importance of safeguarding processes, governance and whistleblowing following the inquiry into the RNIB. The failings led to repeated incidents where young people in its schools and residential homes were put at risk, or suffered harm and distress.

Protect Chief Executive Liz Gardiner said, “We welcome the Charity Commission’s reminder to charities to ensure they have effective whistleblowing or Speak Up arrangements, and the emphasis on anti-retaliation measures towards whistleblowers.  However, asking charities to be ‘mindful of the issue’  may not be enough to really drive forward change.

The time has come to introduce whistleblowing rules in this sector.  Rules which can be enforced by the regulator will help guide charities on the standards expected of them in this area and hold those falling short to account.

As we saw in our research into charity sector whistleblowing, Time To Transform,  there is more work needed in the third sector to prevent the victimisation of whistleblowers, and train staff in how to effectively act on concerns raised.”

#TimeToTransform


Protect is seeking reassurance from HMRC that whistleblowers who contact the tax authority over furlough fraud will not be faced with paying back their employers’ fraud, or face prosecution if their employer forces them to work while on the scheme.

Calls to Protect’s Advice Line have seen record-high levels, with  more than 250 calls related to furlough fraud – the single biggest issue Protect has dealt with in its 27-year history. During the three-month lockdown, from March 23-June 23, our Advice Line has handled more than 1,120 calls.

Protect has recently responded to a HMRC consultation giving new powers to HMRC under the Finance Bill.

Head of Policy Andrew Pepper-Parsons said, “Our concern is the powers could be turned against whistleblowers and should be reserved for use against those who sign off the fraud. Whistleblowers have no say, let alone any power over the decision to be furloughed and face the prospect of dismissal if they then refuse to work while being on the scheme  If the Government can reassure directors that genuine mistakes over applying for the scheme will not be prosecuted whistleblowers should be given a similar commitment.

Many calls to Protect’s Advice Line on furlough fraud have been around whistleblowers own liability in relation to the fraud.  Much like the assurances given to directors that mistakes won’t be punished, we’d like to see this extended to whistleblowers.”

Protect statistics (as of June 15)

Top three industries (92% of which are from private sector)  are from :

Hospitality (20%)

Manufacturing (12%)

Retail (12%).

Of the furlough cases received -66% – have been from organisations with less than 50 staff.

Protect has also raised with HMRC officials concerns over the closure of HMRC’s fraudand if an alternative – such as a secure live chat option – could and will be provided for people who seek reassurance about reporting fraud. We appreciate some modest changes have been made to the website since Protect’s conversation but we would like more to be done.

“The other reassurance we seek-  and it is a big unknown – with so many reports being made to HMRC we would like to know a firm plan is in place to investigate the thousands of fraud reports received by HMRC” said Andrew Pepper-Parsons.

 

What a concerned worker can do if concerned:

Check the Government Guidance

Though the guidance has changed many times it is a good resource to look at what the Government have produced for workers, and what they expect from employers. This will give any concerned worker an idea of whether what the employer is doing breaches this or not.

Consider raising it first internally

Raising the concerns externally

If you do not feel that internal channels will be effective, or if you have already raised the concern internally, you can contact HMRC on their Fraud Reporting via their online form.  You can also contact Protect for advice through our online form or by calling 020 3117 2520


Research by Protect – Silence in The City 2 –  into whistleblowers who work in finance in the City has found 70% who spoke up about workplace wrongdoing were victimised, ignored, dismissed, or felt forced to resign after whistleblowing.

The research analyses the whistleblowing cases of 352 finance workers who called the Protect Advice Line for advice about workplace wrongdoing they had witnessed between January 2017 and December 2019.

Head of Policy at Protect, Andrew Pepper-Parsons, said, “We conducted research in 2012 with law firm Slater & Gordon and our report Silence in the City looked into the experience of whistleblowing in the financial services sector.  At that time the financial crash and Libor scandal raised the question – why hadn’t whistleblowers come forward with concerns? Our research back then found a lack of trust and transparency. We decided it was time to once again scrutinise our Advice Line data and look at calls from finance workers.”

Silence in the City 2, once again published with the support of Slater & Gordon, found although more workers are raising concerns with their employer since 2012, 70% were being victimised, ignored or felt forced to resign after blowing the whistle. Discrimination and harassment cases now form part of the top six concerns raised by whistleblowers.

Key findings: (SITC – Silence in the City)

  • 70% of whistleblowers were either victimised, dismissed or resigned
  • Discrimination and harassment cases form a top concern raised by whistleblowers (possibly due to the #MeToo movement)
  • Top concerns – 19% has shifted from fraudulent or criminal activity in SITC1 which includes theft of client’s funds, expenses fraud etc. (19%), to legal or regulatory breaches e.g. mis-selling of financial products, failure to follow compliance rules around loans etc.
  • 33% of concerns were ignored – a disappointing increase from 30% in Silence in the City 2012)
  • More trust among whistleblowers to use internal whistleblowing arrangements – SITC1 found 78% of whistleblowers raised their concerns internally, i.e. with their employers, new research SITC2, shows increase to 93%.
  • Whistleblowers are 10% more likely to raise their concern a second time. In SITC1, only 20% of financial services whistleblowers raised their concern a second time, in SITC2 this has risen to 30%.

One case study in Silence in the City 2, is ‘Carl’ (whose name has been changed) explained he blew the whistle on sexual harassment, bullying and racism after more than ten colleagues, across nine different departments were affected. His life was made difficult after blowing the whistle and he felt resignation was the only way out.

He said, “I don’t in all my years think I’ve known so many grown men and grown women tell me the trauma they’ve gone through and I’m not the sort of person that upsets easily. It’s been extremely upsetting to see people abuse their position of power and misuse authority to gain benefit.”

Clive Howard, Principal Employment Lawyer at Slater & Gordon, said, “That 7 in 10 raising concerns were victimised for doing so and a third reported that their concerns were ignored is deeply troubling. The findings from Silence in the City 2 confirm our own experiences with clients, blowing the whistle is a lonely exercise in Financial Services. The whistleblower invariably is forced to act alone, raising their concern without any support from colleagues.”

Protect says whilst positive there is much more awareness and trust by employees in the internal whistleblowing arrangements put in place by employers, and more employees are whistleblowing and giving their employers the opportunity to put things right – this could very easily be reversed if organisations don’t change their behaviour towards staff who speak up.

Protect Chief Executive Liz Gardiner said, “Cultural change in financial services sector has stalled.   There needs to be more than lip-service to the stronger rules and regulations imposed on the sector – whistleblowers are speaking up, but our research suggests too many employers are not listening-up in response.  A failure to listen to the concerns raised – and failure to prevent whistleblowers being victimised – may increase the risk of harm and wrongdoing going unchecked.”

Read the report Silence in The City


We would like to express our huge thanks to our Legal Support Network – made up of lawyers and barristers –who are helping us with case work for whistleblowers who have contacted us.

Our Advice Line is extremely busy and we are experiencing unprecedented record high call levels. Our Advisers are taking calls from all sectors but the biggest concern we are dealing with are concerns around furlough fraud.

In the last few weeks we have been able to refer pro bono case work to our Legal Support Network who have been helping with the following issues:

  • Reviewing documents including applications to employment tribunals
  • Advising on cases around ‘worker status’ – looking at whistleblowing protection for contractors and other unusual employee relationships
  • Advising on merits of appeal to Employee Appeal Tribunal
  • Advising on alternative types of claim other than employment tribunal – for example pursuing a claim via the High Court
  • Advising on complex Non-Disclosure Agreements

Protect Legal Officer Hari Raithatha said, “We are extremely grateful to colleagues in our Legal Support Network for the invaluable support they have provided to whistleblowers during one of the busiest times our charity has ever experienced. The important role whistleblowing plays in keeping us all safe from harm has been highlighted during Covid-19.

“We hope that employers will listen-up when concerns are raised – but we’re grateful to the many lawyers and barristers who have kindly agreed to help.”

Protect’s Legal Support Network:

Daniel Stilitz QC of 11KBW

Mukhtiar Singh of Garden Court Chambers

Joseph England of 3PB

Chris Milsom of Cloisters Chambers

James Laddie QC of Matrix Chambers

Solicitors Paul Daniels at Keystone Law

Leigh Day Solicitors

Slater & Gordon Lawyers

Harrison Clark Rickerbys

Kingsley Napley

Landau Law

We would like to welcome Nick Siddall QC, Ed Kemp, Ben Gray, James Wynne, Sophia Berry, Kieran Wilson and Jeremy Lewis of Littleton Chambers to Protect’s Pro Bono Legal Support Network.

If further law firms or Chambers wished to lend their support and advice during the Covid 19 crisis, Protect are co-ordinating pro bono work. Please contact hari@protect-advice.org.uk