FCA Chairman Under Scrutiny for Alleged Breach of Whistleblower Protocols

The Financial Conduct Authority (FCA) is initiating an independent investigation into its chairman, Ashley Alder, who faces allegations of breaching the regulator’s established code of conduct concerning whistleblower protections.

Richard Lloyd, the FCA’s senior independent director, will spearhead the review into Alder’s actions, particularly regarding claims that he disclosed the identity of a whistleblower who had explicitly requested anonymity.

Alder, who has been at the helm of the FCA for 18 months, reportedly shared emails from the whistleblower with FCA officials without redacting the individual’s name and personal details.

The situation has drawn increased scrutiny following comments from Harriett Baldwin, the former chairwoman of the Commons Treasury select committee, who indicated that the committee would likely want to examine the matter closely when Alder next appears before them.

The whistleblower, a former FCA employee dismissed in 2021 for alleged misconduct, expressed feelings of being “angry, stunned, and speechless” upon finding out their identity had been revealed, as reported by the Financial Times’ Banking Risk and Regulation Service.

Despite losing an employment tribunal case against the FCA—a ruling currently being appealed—the whistleblower had written to Alder detailing alleged questionable hiring practices within the agency. Alder subsequently forwarded this unredacted information to two other officials within the FCA over the course of several months, as detailed by the FT.

The FCA’s whistleblower guidelines clearly state: “Your identity will not be revealed without your consent.” However, it appears that the necessary discussions regarding identity disclosure did not occur, according to the whistleblower.

In communications to Alder, the whistleblower specifically requested confidentiality and referenced the FCA’s own whistleblower policy, which pledges to maintain anonymity unless prior discussions are held about disclosing identity—discussions, the whistleblower asserts, never took place.

Georgina Halford-Hall, Chief Executive of WhistleblowersUK, has called for Alder’s resignation, stating, “This case starkly illustrates that the FCA has not managed its internal procedures effectively, which raises serious questions about its capability to regulate effectively.”

Alder, 65, previously served as the chief executive of the Hong Kong Securities and Futures Commission and began his part-time role with the FCA in February 2023, appointed during Nadhim Zahawi’s tenure as Chancellor, with an annual salary of £170,000.

Legal expert Harvey Knight from Withers noted that this is the second instance of recent criticism aimed at Alder, following pushback over proposals to publicly name firms under FCA investigation before any rulings on their conduct.

Knight remarked, “This demonstrates a troubling inconsistency in the standards the FCA expects from the industry it regulates.”

The FCA has a history of being criticized regarding its handling of whistleblower issues. The Financial Regulators Complaints Commissioner previously reprimanded the agency for disclosing a whistleblower’s identity to Royal Bank of Scotland, now NatWest, despite the allegations in question being unfounded.

Last year, the Information Commissioner’s Office determined that the FCA had violated data protection laws by intercepting confidential correspondence, including whistleblowing emails, indicating a pattern of behavior that raises concerns about the treatment of whistleblowers.

The FCA responded to the current situation by stating, “This is an exceptional case. A former employee raised multiple concerns in different ways, including through an internal complaint and at an employment tribunal. The senior independent director of the FCA’s board will review how it was handled.”

Alder was contacted for further comment.

The issue of whistleblower treatment remains a sensitive matter for the FCA, particularly following its joint fine with the Bank of England on Jes Staley, the former Barclays CEO, for trying to uncover a whistleblower’s identity in 2018.