Whispli Announces Its $2.8M Seed Round

In early October 2023, the FCA published a report on the results of its survey on non-financial misconduct (NFM) in the financial sector. The report is part of the regulator’s broader initiative to address culture and non-financial misconduct in financial services. 

In its NFM survey, the FCA collected information on how firms handle non-financial misconduct. The survey included 1,000 firms across 3 different categories: wholesale banks, wholesale brokers, and retail and wholesale insurers.

Within the context of this report, non-financial misconduct refers to unacceptable behaviour or actions by employees that are not directly related to a financial transaction or financial activity. Examples of such misconduct include sexual harassment, bullying, racism, age discrimination, and other forms of misconduct that are not directly related to financial activities. Importantly, however, such forms of misconduct can still significantly impact the financial performance, corporate governance, and professional culture of an organisation.

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Key findings

The FCA’s survey found numerous areas of concern. The most significant findings include:

• High rates of non-financial misconduct: The survey found significant levels of non-financial misconduct in the financial services sector. Across the 1,000 firms surveyed, 1,363 non-financial misconduct incidents were reported between 2021 and 2023. The FCA noted that this number was likely to be much lower than the actual number of incidents, as many incidents go unreported.
• Inadequate whistleblowing systems: The survey found that only 14% of the firms surveyed had a whistleblowing system that included a dedicated mechanism for reporting non-financial misconduct. This indicates that many firms lack a comprehensive whistleblowing system that encourages employees to speak up about non-financial misconduct.
• Poor oversight of whistleblowing: The survey revealed that most of the firms surveyed had limited oversight of their whistleblowing systems. The FCA found that 28% of the firms had no documented procedure for handling whistleblowing reports. The lack of documented procedures for handling reports suggests that many firms are not taking whistleblowing seriously and are not providing adequate support for employees who come forward with concerns.
• Inadequate policies for dealing with non-financial misconduct: The survey also found that many firms had inadequate policies for dealing with non-financial misconduct. For example, only 35% of the firms had a specific policy for dealing with sexual harassment claims.
• Limited use of data and analytics: The survey found that many firms were not making use of data and analytics to identify and address non-financial misconduct. Only 44% of the firms surveyed were tracking and analysing trends in their whistleblowing data, and only 23% of firms were using data to benchmark their performance against industry norms.

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Recommendations for improving non-financial misconduct handling

As a result of its findings, the FCA set out a number of actions that firms should take to improve their handling of non-financial misconduct, such as:

• Establish a clear definition of non-financial misconduct: Firms should have a clear and consistent definition of what constitutes non-financial misconduct. This definition should be communicated to all employees and should be included in a firm’s policy documents.
• Review whistleblowing policies and procedures: Firms should review their whistleblowing policies and procedures to ensure that they are fit for purpose. This review should include an assessment of the effectiveness of the firm’s whistleblowing system and any gaps in the system.
• Implement a dedicated reporting mechanism for non-financial misconduct: Firms should implement a dedicated mechanism for reporting non-financial misconduct. This mechanism should be separate from the firm’s financial misconduct reporting system and should be easy to use and accessible to all employees.
• Establish a robust investigation process for non-financial misconduct: Firms should have a robust process for investigating and resolving non-financial misconduct reports. This process should include a clear escalation path for reports that require further investigation.
• Provide training for all employees on non-financial misconduct: Firms should provide training for all employees on the definition of non-financial misconduct and how to report it. This training should be provided on a regular basis and should be tailored to the specific needs of each firm.

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Why an effective whistleblowing system is key to addressing non-financial misconduct

Given the FCA’s findings, organisations in the financial sector should look at implementing a dedicated, comprehensive whistleblowing system to ensure that they can meet the regulator’s expectations. An effective whistleblowing system has many benefits:

• A dedicated reporting mechanism: An effective whistleblowing system provides a dedicated and secure channel for employees to report non-financial misconduct. The mechanism should be easy to use and accessible to all employees. A whistleblowing system that is difficult to use or that employees don’t trust will not be effective in encouraging employees to come forward with concerns.
• Anonymous reporting: An effective whistleblowing system should allow employees to report concerns anonymously, if they prefer to do so. This can be particularly important in cases of non-financial misconduct, where employees may be concerned about the potential consequences of coming forward.
• A comprehensive audit trail: A whistleblowing system should provide a comprehensive audit trail of all reports, including the date of the report, the nature of the concern, and any action taken. This audit trail can be used to track trends in misconduct and to identify areas of the business that may need additional attention.
• Data and analytics: A whistleblowing system that provides data and analytics can help organisations to identify trends in misconduct and to measure the effectiveness of their whistleblowing policies. This data can also be used to benchmark performance against industry norms and to identify areas for improvement.

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How Whispli can help

Whispli is a comprehensive, purpose-built whistleblowing system that can help organisations in the financial sector to meet the FCA’s recommendations and address non-financial misconduct effectively. Some of the key features of Whispli’s system include:

• Multiple reporting channels: Whispli’s system provides multiple reporting channels, including anonymous reporting, which makes it easier for employees to report concerns. Whispli’s reporting portal can be easily customised to the specific needs of each firm, making it easier for employees to use.
• Dedicated case management: Whispli’s system provides a comprehensive case management system, which helps compliance teams to manage and investigate reports efficiently and effectively. It also supports the provision of feedback to the reporter, providing a secure two-way communication channel between the reporter and the compliance team.
• Data and analytics: Whispli’s system provides comprehensive data and analytics, which can be used to identify trends in misconduct and to measure the effectiveness of the firm’s whistleblowing policies. The data and analytics can be used to benchmark performance against industry norms and to identify areas for improvement.

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Conclusion

The FCA’s survey on non-financial misconduct is a clear signal that firms need to take action to improve their whistleblowing systems and policies. The findings indicate that many firms in the financial sector are not doing enough to encourage employees to speak up about non-financial misconduct. By implementing a comprehensive whistleblowing system like Whispli, organisations can provide a safe and secure channel for employees to report concerns, and can more effectively identify, investigate and address non-financial misconduct.