The only organisations that should fear whistleblowers are those with something to hide
UK businesses should welcome, not fear, proposed legislation to strengthen protections for whistleblowers, says Peter Tutton
The Horizon scandal, grooming gangs, vehicle safety cover-ups – all these issues have made headlines over the past year. The common thread is the involvement of whistleblowers – either in exposing the scandal or providing critical evidence to prevent and overturn miscarriages of justice.
But what this unremitting stream of cases has also exposed is a deeply flawed system. Whistleblowers in the UK are often ignored and, in some cases, put under severe pressure and intimidated. Understandably, the feeling that calling out bad behaviour has no benefit to the individual or organisations has become pervasive.
For years, it’s been obvious that legal protections for whistleblowers under the Public Interest Disclosure Act 1998 (PIDA) are unable to adequately protect those who are taking the considerable risk of speaking out.
These limitations have now prompted a much-needed legislative response.
The second reading of a private members’ bill introduced by WhistleblowersUK is due to take place this Summer. Not only does it seek to extend protections to anyone working within a company – PIDA does not protect disclosures made by contractors, trustees, partners, temporary staff and non-executive directors – but it also includes a requirement for allegations to be investigated. That obligation is sorely needed and stands in marked contrast to the ambiguity within the current system.
The bill proposes the creation of a dedicated Office of the Whistleblower to oversee the legislation’s application and enforce standards. While the bill is still in the early stages and not guaranteed to be passed into law, it signals an increasing focus in Westminster on strengthening whistleblower protections.
The bill’s second reading coincides with businesses gearing up for the Failure to Prevent Fraud offence, set to take effect on 1 September under the Economic Crime and Corporate Transparency Act 2023. The offence identifies whistleblowing as a critical component of an effective compliance programme and establishes that businesses that fail to establish proper whistleblowing channels risk prosecution and unlimited fines.
Rewards for whistleblowers
It also comes amid growing calls for whistleblowers to be paid for reporting wrongdoing, with incentivisation featuring prominently in the SFO’s latest business plan. The prospect of sizeable financial reward will doubtless embolden would-be whistleblowers and increase scrutiny on every aspect of a company’s operations.
So how should corporate Britain react? Some companies may well view new legislation as an onerous compliance cost – a regulatory necessity that, while well-intentioned, creates yet more expensive red tape for businesses to contend with in a budget constrained environment.
That’s narrow-minded and fails to recognise the benefits that effective whistleblowing channels provide for businesses.
Reforming the system through legislation is good news for everyone. While being legally obligated to build and maintain effective whistleblowing infrastructure requires initial investment, the long-term value of doing so is substantial.
Establishing secure channels that allow employees to voice their concerns without fear of retaliation helps uncover misconduct in its early stages, well before it begins to spiral out of control and potentially into the public domain. By identifying problems early on, these channels also mitigate the risk of wrongdoing leaking into the public domain.
The importance of listening to employees and acting early was reinforced by last week’s announcement from the SFO that it plans to offer more deferred prosecution agreements to companies that self-report wrongdoing. Having the right whistleblowing procedures in place will make that identification and self-reporting process easier and should minimise the risk of being hit with criminal prosecution.
But it’s not solely about preventing criminal breaches and avoiding hefty fines. Maintaining effective whistleblowing procedures also creates stronger company cultures. Formal channels to express concerns make employees feel heard and valued, while the ability to nip wrongdoing in the bud prevents problematic behaviour from becoming institutionalised.
Effective whistleblowing policies safeguard value and ultimately build stronger and more resilient companies. The UK’s business community should welcome new legislation. It will provide much-needed clarity on the precise steps organisations need to take and encourage a forward-looking mindset, which will help prevent the kind of high-profile scandals that can cost businesses reputationally and financially.
The only organisations that should fear reform are those with something to hide.
Peter Tutton is associate managing director at Nardello & Co.