Berlin, Germany, 30 November 2022 – Funanga, the Berlin-based instant cash payment service for online merchants ,today released a report on whistleblowing reports submitted to the UK Financial Conduct Authority (FCA). Funanga submitted two Freedom of Information (FOI) requests to the FCA in 2022 and can reveal that whistleblowing reports decreased significantly in the aftermath of Covid, but are starting to rise again in 2022. Anonymous reports have also skyrocketed in 2022 since workers returned to the office. The research suggests that FCA efforts to encourage whistleblowers have not succeeded, that reports take too long to be actioned, and that the regulator is overlooking the elephant in the room – money laundering.
The FCA regulates the activity of more than 50,000 financial services firms in the UK and receives hundreds of reports of wrongdoing every year. These reports inform its regulatory efforts and helps it identify harm to consumers, markets, the economy and wider society. Key findings from the FOI report include:
- Whistleblowing reports to the FCA declined significantly during the pandemic (down 13% in 2021 compared to 2019. 2020 numbers were also down from March onwards
- Reports of wrongdoing have started to rise again in 2022. Reports in 2022 have risen by 6% compared to the same period in 2021. Anonymous reports have also risen by a massive 53% in 2022
- The most common type of wrongdoing reported to the FCA is about fitness and propriety
- Whistleblowing cases are often protracted – for example, of the 108 reports received in June 2021, only 5 had been resolved with significant action taken against the company six months later (4.6%)
- There is approximately a ~50% chance of the FCA taking significant action against a company reported to them within 2 years
- The FCA whistleblowing team only has 16 people – a relatively small team considering the number of reports, the potentially serious allegations therein and the length of investigations
- The FCA does not recognise money laundering as a category of whistleblowing reports, which could have a political motive, to shield the UK from being viewed as a money laundering hotspot
Jens Bader, Funanga CEO:
“The last 36 months have been a petri-dish for increased money-laundering, financial scams, fraud, and other forms of non-compliance. Meanwhile the FCA launched a new whistleblowing initiative in 2021 (‘In confidence, with confidence’) to encourage more reporting of wrongdoing from employees in the Financial Services sector. All logical analysis would conclude whistleblowing cases would spike, yet the opposite is true. Whistle-blowers fell silent in the aftermath of Covid, even if the wrong-doing never went away.”
“I’m deeply sceptical that wrongdoing is in decline across the financial services sector. People and businesses have not changed. Instead, it shows the limitations of the FCA’s efforts to encourage whistleblowing. Without more transparency, speed, and meaningful action, people may be discouraged from reporting wrongdoing. Do people have enough faith in the regulators to blow the whistle? I’m not convinced.”
“As for FCA action, our FOI demonstrates that there is a big gap between when a report is filed, and when it is concluded. Likewise, one may conclude that there is a political motive in the FCA’s reluctance to call out money laundering in its whistleblowing accounts. It may not want the UK to be seen as a money laundering hub”.
Download the report free here.
CashtoCode is operated by Berlin-based Fintech Funanga AG. Launched in 2016, the CashtoCode platform connects a vast network of online merchants from various industries and payment service providers with over 360,000 retail locations across Europe and international markets. The CashtoCode service enables customers to conveniently pay for their online purchases with cash at their chosen retail location. As such CashtoCode technically manages through its vast networks of partners the secure, convenient, and compliant collection and settlement of cash from customers globally
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