Monday, 25 February 2019 13:39

The empowerment of whistleblowers - how the wind of social and cultural change is impacting Corporate Governance

Whistleblowing in the workplace is on the rise. Changes in legal and regulatory developments over the years have had an impact. However, the significant rise in the use of social media (#meToo movement) fake news propaganda, and economic and political distrust emanating from Brexit have all come together to create an empowering and stimulating cultural environment in which staff are more likely than ever before to speak up and raise concerns about wrongdoing in the workplace.

There are other contributing factors too. A recent landmark Court of Appeal case has also made it easier for employees to bring whistleblowing claims against both businesses and their directors. In the Osipov case, the Court of Appeal upheld a decision that two non-executive directors were liable for their part in the dismissal of the CEO, who had raised corporate governance concerns. The decision is significant because businesses can now be held vicariously liable for the actions of their staff that dismiss other staff in their company.

With such evolutionary social and cultural changes, businesses across the country are naturally concerned with demonstrating strong ethical leadership and a healthy culture.

In the financial services sector, where there has been a string of domestic and global corporate scandals in recent years, the introduction of rules in 2016 by the Prudential Regulation Authority and Financial Conduct Authority made it mandatory to have effective policies and processes for the reporting of whistleblowing concerns. The Financial Conduct Authority will be further concentrating on a culture agenda this year with closer staff engagement being seen as a fundamental element to the success of whistleblowing arrangements.

The impact of cultural change was also reflected in several key changes in the Financial Reporting Council’s 2018 Corporate Governance Code, which provided clear emphasis in enabling increased board engagement with the workforce to understand their views. The Code also requires boards to routinely review their whistleblowing measures to ensure that arrangements are in place for the proportionate and independent investigation of concerns and for follow-up action.   One key feature will be to ensure that when staff do speak up they are listened to and the concern is investigated effectively.

With the wind of social and cultural change and the encouragement of further open communication with employees and key stakeholders it is likely that business’s whistleblowing arrangements will come under greater focus over the next few years. Business’s need to quickly adapt and respond effectively to these factors.   Increased levels of whistleblowing concerns will inevitably test the effectiveness of business’s corporate governance framework and increasingly expose businesses to regulatory and reputational risk.

External whistleblowing service providers can provide a safe and supportive environment for employees to raise concerns and enhance businesses Corporate Governances framework. If you would like further information about implementation of an independent external whistleblowing service please follow this link, or alternatively, please contact our sales team on +44(0)1224 625111

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