Regulatory Oversight
Treatment of whistleblowers in spotlight after FCA receives record number of SYSC 18 reports
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August 18, 2025
One in eight people who made a protected disclosure to the Financial Conduct Authority (FCA) between April and June this year included a SYSC 18 allegation in their report, the highest number of allegations since the FCA began publishing whistleblower data in the third quarter of 2021.
SYSC 18 is the section of the FCA handbook that sets out how firms should handle protected disclosures and makes clear that causing a whistleblower to suffer detriment — which can include retaliation or loss of promotion — could lead to action against an individual perpetrator, or even jeopardise a firm’s threshold conditions.
In all, 40 individuals could have reported they suffered detriment after previously making a protected disclosure to their employer.
Andrew Pepper-Parsons, director of policy at whistleblowing charity Protect, said: “The FCA needs to keep a close eye on the financial services organisations it regulates and pay close attention to its own data.
“Being punished because you have blown the whistle is a breach of employment rights. Whether this is bullying, harassment or ostracisation, or simply a failure to respect your confidentiality as a whistleblower, organisations in the financial sector need to be mindful of the FCA rules when responding to whistleblowing concerns raised by their own staff.”
Cases that end up at the Employment Tribunal repeatedly show individuals being bullied or put through sham redundancies after voicing concern about a firm’s failure to comply with financial regulation.
“While this data represents unsubstantiated reports, the FCA should ensure financial services organisations are not slipping in the way they implement the FCA handbook,” Pepper-Parsons said.
Tim Morss, chief executive of ethics and compliance platform SpeakUp, agrees the Q2 data should be a wake-up call for financial firms.
“A sudden jump to 40 SYSC 18 detriment cases in a single quarter is a clear warning sign. These are not minor complaints but allegations of retaliation against whistleblowers, which is a direct breach of FCA rules. When issues reach the regulator, the opportunity for early, discreet resolution is already lost,” he said.
“Firms should be investing in trusted internal reporting systems that use technology to flag risks earlier, track case handling, and monitor for signs of retaliation. Protecting whistleblowers is not only a regulatory requirement but also critical for maintaining a culture where employees feel safe to speak up.”
Under a 2019 directive the European Union requires firms to track and keep evidence that whistleblowers have not suffered post-reporting detriment. The UK has no such law, although SYSC 18 gives financial services regulators the ability to ban those who harm individuals making protected disclosures from the industry, and decide on a firmʼs threshold conditions.
Whistleblowing amendment
The House of Lords passed an amendment to the Employment Rights Bill on July 16 that would require employers with 50 employees, or more, to “take reasonable steps” to investigate disclosures and protect those who make them.
The amendment, which passed with a 98 vote majority was proposed by UK whistleblowing charity Protect and drafted by Lord Michael Wills.
The bill will have its third reading in the House of Lords once Parliament resumes in September. After that it will be up to the government to decide whether it will accept the amendment, or not, before the bill is made law.
“The government has already acknowledged the need for whistleblowers to receive greater protection so I would like to see [it] seize this rare legislative opportunity to bring in such protection,” Lord Will said.
Underlying elements
The FCA splits the protected disclosures it receives into their constituent parts. In Q2, 2025, the 315 reports comprised a collective 1,130 allegations. The largest category was “compliance” (199), followed by “fitness and propriety” (162), and “culture or organisation” (147).
Closed reports
The FCA said it closed the files on 350 whistleblowing reports between April and June this year. Closed reports will have been submitted in previous quarters, however the data set does not include when the reports were first submitted. Data released in Freedom of Information responses shows that the regulator can take several years to fully investigate allegations received in a protected disclosure.
Of the cases closed last quarter, 2.3% led to “significant action”, which the FCA defines as including a section 166 skilled person report or placing restrictions on a firm or individual. A further 42% led to the regulator “taking action to reduce harm”. This includes writing to or visiting a firm, an information request or requiring an attestation that rules will be followed.
Asked about the spike in SYSC18 allegations the FCA said it takes all whistleblower allegations seriously and uses its quarterly data to raise awareness with relevant areas of the organisation of any themes highlighted by whistleblowing intelligence.
“The nature of whistleblowing means there are regular fluctuations in the data. We routinely monitor for any trends. Each whistleblowing report to us is assessed by the relevant team. And, as the data shows, we take action when that identifies wrongdoing,” the FCA said.