Should Regulators Pay Whistleblowers? The FCA Thinks Differently
Monday,04/08/2014|22:09GMTby
Adil Siddiqui
Conflicting views in either side of the Atlantic have opened-up debate on the benefits of running an incentivized whistleblower program, when the British watchdog utterly rejects the Americans' supportive approach.
News coming out of the US and UK on the remuneration of whistleblowers from the financial regulatory authorities of both countries have been signalling differing views. The UK's main financial watchdog, the Financial Conduct Authority (FCA), believes Payments have no value in increasing quality disclosures. On the contrary, US securities regulator, the Securities Exchange Commission (SEC) hands out a substantial sum to an unidentified whistleblower.
The UK's FCA issued a report on the sensitive whistleblower incentives programme. Its findings state that payments or incentives to encourage the practice, have no real value or benefit. A claim members of the UK's FX industry agree with, the regulator's report states: "The research showed that introducing financial incentives for whistleblowers would be unlikely to increase the number or quality of the disclosures we receive from them."
"In a self regulated environment people who want to whistleblower will, payments are the motivator it's doing the right thing," explained one London-based compliance official who remains anonymous.
A UK regulated CFD broker added to Forex Magnates: "We haven't come across any instances where whistleblowing is prevalent in our immediate sector."
The report states that since the introduction of the US led rulings on payments for whistleblowing, only a small number of cases have to come light, with the possibility of false and malicious claims taking presidence.
The increasing role of whistleblowers comes to light on the back of major scandals that impacted the international financial markets. Banks and brokers have been paying the price of manipulation in the settling of Libor and currency rates.
In 2013, a UK governing body, the Parliamentary Commission on Banking Standards (PCBS), issued a paper which encouraged firms to improve their governance on the matter.
The FCA report comes during a period where the SEC, the US's main securities regulator, issued a substantial reward to an individual for their role in a case. In the details issued by the SEC, a statement read that the whistleblower provided the agency with “specific, timely and credible” information that assisted the authorities in their investigation, the whistleblower is believed to have provided critical information that lead to the disciplinary action against the firm.
The concept of whistleblowing has two main purposes, on the one hand it acts as a safety net for regulated firms that are breaching guidelines and staff can raise their concerns. In addition, it acts as a substitute for firms which have inadequate measures to deal with procedural discrepancies. In the recent SEC case, the regulator emphasised the fact that the whisteblower had reported issues to the firm's management, however they failed to act.
“The whistleblower did everything feasible to correct the issue internally. When it became apparent that the company would not address the issue, the whistleblower came to the SEC in a final effort to correct the fraud and prevent investors from being harmed,” said Sean McKessy, Chief of the SEC’s Office of the Whistleblower, in a statement.
The SEC implemented new payment incentives for whistleblowers in 2011 under the doctrine of the Dodd-Frank Act. The whistleblower program rewards whistleblowers who share high-quality original information that results in an SEC enforcement action with sanctions exceeding $1 million.
The SEC reported in October 2013, that it paid one unidentified whistleblower $14million, the highest single payment to any tipster.
The FCA favours against the implementation of incentives for whistleblowers, on the other hand, the watchdog will be addressing the matter by strengthening the regulatory framework, it concludes: "(The FCA will go ahead) with the regulatory changes necessary to require firms to have effective whistleblowing procedures, and to make senior management accountable for delivering these."
News coming out of the US and UK on the remuneration of whistleblowers from the financial regulatory authorities of both countries have been signalling differing views. The UK's main financial watchdog, the Financial Conduct Authority (FCA), believes Payments have no value in increasing quality disclosures. On the contrary, US securities regulator, the Securities Exchange Commission (SEC) hands out a substantial sum to an unidentified whistleblower.
The UK's FCA issued a report on the sensitive whistleblower incentives programme. Its findings state that payments or incentives to encourage the practice, have no real value or benefit. A claim members of the UK's FX industry agree with, the regulator's report states: "The research showed that introducing financial incentives for whistleblowers would be unlikely to increase the number or quality of the disclosures we receive from them."
"In a self regulated environment people who want to whistleblower will, payments are the motivator it's doing the right thing," explained one London-based compliance official who remains anonymous.
A UK regulated CFD broker added to Forex Magnates: "We haven't come across any instances where whistleblowing is prevalent in our immediate sector."
The report states that since the introduction of the US led rulings on payments for whistleblowing, only a small number of cases have to come light, with the possibility of false and malicious claims taking presidence.
The increasing role of whistleblowers comes to light on the back of major scandals that impacted the international financial markets. Banks and brokers have been paying the price of manipulation in the settling of Libor and currency rates.
In 2013, a UK governing body, the Parliamentary Commission on Banking Standards (PCBS), issued a paper which encouraged firms to improve their governance on the matter.
The FCA report comes during a period where the SEC, the US's main securities regulator, issued a substantial reward to an individual for their role in a case. In the details issued by the SEC, a statement read that the whistleblower provided the agency with “specific, timely and credible” information that assisted the authorities in their investigation, the whistleblower is believed to have provided critical information that lead to the disciplinary action against the firm.
The concept of whistleblowing has two main purposes, on the one hand it acts as a safety net for regulated firms that are breaching guidelines and staff can raise their concerns. In addition, it acts as a substitute for firms which have inadequate measures to deal with procedural discrepancies. In the recent SEC case, the regulator emphasised the fact that the whisteblower had reported issues to the firm's management, however they failed to act.
“The whistleblower did everything feasible to correct the issue internally. When it became apparent that the company would not address the issue, the whistleblower came to the SEC in a final effort to correct the fraud and prevent investors from being harmed,” said Sean McKessy, Chief of the SEC’s Office of the Whistleblower, in a statement.
The SEC implemented new payment incentives for whistleblowers in 2011 under the doctrine of the Dodd-Frank Act. The whistleblower program rewards whistleblowers who share high-quality original information that results in an SEC enforcement action with sanctions exceeding $1 million.
The SEC reported in October 2013, that it paid one unidentified whistleblower $14million, the highest single payment to any tipster.
The FCA favours against the implementation of incentives for whistleblowers, on the other hand, the watchdog will be addressing the matter by strengthening the regulatory framework, it concludes: "(The FCA will go ahead) with the regulatory changes necessary to require firms to have effective whistleblowing procedures, and to make senior management accountable for delivering these."
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Charlotte reflects on the Summit so far and talks about the culture inside fintech banks today. We look at the pressures that come with scaling, and how firms can hold onto the nimble approach that made them stand out early on.
We also cover the state of payments ahead of her appearance on the payments roundtable: the blockages financial firms face, the areas that still need fixing, and what a realistic solution looks like in 2026.
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In this conversation, we sit down with Drew Niv, CSO at ATFX Connect and one of the most influential figures in modern FX.
We speak about market structure, the institutional view on liquidity, and the sharp rise of prop trading, a sector Drew has been commenting on in recent months. Drew explains why he once dismissed prop trading, why his view changed, and what he now thinks the model means for brokers, clients and risk managers.
We explore subscription-fee dependency, the high reneging rate, and the long-term challenge: how brokers can build a more stable and honest version of the model. Drew also talks about the traffic advantage standalone prop firms have built and why brokers may still win in the long run if they take the right approach.
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A concise look at where compliance, onboarding, and AI-driven processes are heading next.
In this interview, Remonda Z. Kirketerp Møller, founder of Muinmos, breaks down the state of AI in regtech and what responsible adoption really looks like for brokers. We talk about rising fragmentation, the pressures around compliance accuracy, and why most firms are still in the early stages of AI maturity.
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A concise look at where compliance, onboarding, and AI-driven processes are heading next.
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We start with Aydin’s view of the Summit and the challenges brokers face as fraud tactics grow more complex. He explains how firms can stay ahead through real-time signals, data patterns, and early-stage detection.
We also talk about AI training and why compliance teams often struggle to keep models accurate, fair, and aligned with regulatory expectations. Aydin breaks down what “good” AI training looks like inside a financial environment, including the importance of clean data, domain expertise, and human oversight.
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Exness expands its presence in Africa: Inside our interview with Paul Margarites in Cape Town
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Finance Magnates met with Paul Margarites, Exness regional commercial director for Sub-Saharan Africa, during a visit to the firm’s office opening in Cape Town. In this talk, led by Andrea Badiola Mateos, Co-CEO at Finance Magnates, Paul shares views on the South African trading space, local user behavior, mobile trends, regulation, team growth, and how Exness plans to grow in more markets across the region. @Exness
Read the article at: https://www.financemagnates.com/thought-leadership/exness-expands-its-presence-in-africa-inside-our-interview-with-paul-margarites/
#exness #financemagnates #exnesstrading #CFDtrading #tradeonline #africanews #capetown
Finance Magnates met with Paul Margarites, Exness regional commercial director for Sub-Saharan Africa, during a visit to the firm’s office opening in Cape Town. In this talk, led by Andrea Badiola Mateos, Co-CEO at Finance Magnates, Paul shares views on the South African trading space, local user behavior, mobile trends, regulation, team growth, and how Exness plans to grow in more markets across the region. @Exness
Read the article at: https://www.financemagnates.com/thought-leadership/exness-expands-its-presence-in-africa-inside-our-interview-with-paul-margarites/
#exness #financemagnates #exnesstrading #CFDtrading #tradeonline #africanews #capetown
