The CEO of Barclays, Jes Staley is fined over $850,000 (£642,430) for failing to adequately supervise the company’s whistleblowing systems. The UK authorities have also announced special requirements regarding whistleblowing systems and controls at Barclays.
The London-headquartered bank must report annually to the regulators detailing how it handles whistleblowing. The details include with personal attestations required from those Senior Managers responsible for the relevant systems and controls.
Commenting on the matter the FCA’s Executive Director of Enforcement and Market Oversight, Mark Steward, said: “Given the crucial role of the Chief Executive, the standard of due skill, care and diligence is more demanding than for other employees. Staley breached the standard of care required and expected of a Chief Executive in a way that risked undermining confidence in Barclays’ whistleblowing procedures.”
“Chief Executives must act with a high degree of care and prudence at all times. Whistleblowers play a vital role in exposing poor practice and misconduct in the financial services sector. It is critical that individuals are able to speak up anonymously and without fear of retaliation if they want to raise concerns,” Steward explained.
Back in June 2016, Staley attempted to identify the author of an anonymous letter which was received by Barclays that claimed to be from a Barclays shareholder. In the letter, the anonymous tipster included some allegations against the CEO.
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According to the FCA, given his conflict of interest, Staley should have maintained an appropriate distance from the matter. Instead, he attempted to identify the author, therefore exposing himself to regulatory action.
Commenting on the settlement, the Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, Sam Woods, said: “Protection for whistleblowers is an essential part of keeping the financial system safe and sound. Staley’s behavior fell below the standard we require, resulting in today’s fine and public censure.”
“In addition, Barclays is now subject to special requirements to report to the PRA and FCA how it handles its whistleblowing cases in the coming years,” Woods explained.
The investigation by the UK FCA and PRA found Staley had a conflict of interest in relation to the letter. Instead of investigating the matter he should have exercised extreme care in maintaining an appropriate distance from the Group Compliance’s investigation.
The UK regulators viewed the misconduct of the CEO of Barclays as sufficient grounds to impose a penalty of 10% of Staley’s relevant annual income. Staley agreed to settle at an early stage of the regulators’ investigation and hence qualified for a 30% discount.
Before this case, Barclays’ whistleblowing policy applied only to employees. It was not until the 7th of September 2016 that the FCA and the PRA introduced new rules requiring firms to provide whistleblowing protections for ‘reportable concerns’ raised by ‘any person’ (i.e., not just workers).