FCA chairman rejects calls to quit over whistleblower blunder

The furore engulfing the Financial Conduct Authority over its chairman’s failure to abide by its own whistleblowing policy has intensified after Ashley Alder resisted pressure to resign.
A review undertaken by Richard Lloyd, the senior independent director on the regulator’s board, and published by the watchdog on Monday found that Alder “did not follow the policy to the letter” when he forwarded emails from two whistleblowers to senior colleagues without removing the individuals’ personal details or obtaining their consent.
Lloyd concluded that Alder’s aim had been “simply to ensure that appropriate action was taken in respect of all the matters the complainants were raising” and that he had acted “in the firm belief that there was no realistic prospect of causing harm to them”.
However, Alder, 65, has attracted criticism for his actions, not least because the authority is responsible for policing whether financial services firms have appropriate whistleblowing arrangements in place. The regulator also encourages individuals to come to it directly to report wrongdoing by a firm or an individual and it promises to protect whistleblowers’ identities.
Kevin Hollinrake, the shadow business and trade secretary, called the episode “extraordinary. It seems odd to me that they’re not following their own process in terms of how they handle whistleblowers, given their responsibility for overseeing whistleblowing policies for all the organisations they regulate. He should consider his position, of course.”
Georgina Halford-Hall, who runs WhistleblowersUK, also said it was a resigning matter.
However, Alder said after the regulator’s annual public meeting on Thursday that “it did not cross my mind” to resign.
“I’m absolutely firm in my view that I acted with the best of intentions,” he said. “Of course if a policy sets expectations, even though that policy is impractical, we would obviously regret that those expectations were not met in this case.”
It is the latest debacle to embroil the authority, which oversees the conduct of about 42,000 financial firms. It has attracted fierce criticism of its handling of the £237 million London Capital & Finance scandal and of its oversight of Neil Woodford’s £3.7 billion Woodford Equity Income Fund before it imploded. Alder became the authority’s chairman in February last year and previously had a long career as a lawyer before running the the Securities and Futures Commission in Hong Kong.
• Neil Woodford’s failings led to collapse of fund, says FCA
Lloyd started his review after the Financial Times last month reported allegations that Alder had unmasked a whistleblower. This prompted a second individual to come forward with similar allegations, the FCA disclosed.
Both were former employees and their cases were “highly unusual”, relating to “matters that have been advanced by the two individuals in extensive correspondence over a number of years, raising numerous issues via various channels, some of which are in the public domain”, the authority said.
It also disclosed that it was reviewing its internal whistleblower policy and that some of its content was “somewhat impractical”.
Alder said that it was “impracticable for non-executive directors to act on issues which are escalated to them without support and advice” and added: “Obviously, in a whistleblowing context, that has to be limited to senior advisers, where there is no doubt that they would treat information with the utmost confidence.”