FCA chairman accused of breaching own rules over whistleblowers

The Financial Conduct Authority has launched an independent review into the conduct of its chairman, who has been accused of violating the regulator’s own code of conduct.
Richard Lloyd, the senior independent director on the FCA board, will conduct a review into Ashley Alder’s role in allegedly unmasking a whistleblower after they had asked for their identity to be kept secret.
Alder, who has led the main City watchdog for the past 18 months, forwarded emails from the whistleblower to FCA officials with the whistleblower’s name, address and concerns unredacted.
The pressure on Alder intensified when Harriett Baldwin, chairwoman of the Commons Treasury select committee in the last parliament, expressed concern. “I am sure the committee would want to scrutinise this next time Ashley Alder comes in front of them,” she said.
The whistleblower, a former FCA employee who had been dismissed in 2021 for alleged misconduct, was left “angry, stunned and speechless” when their identity was passed on, according to the Financial Times’ Banking Risk and Regulation Service, which first reported the story.
The individual, who lost an employment tribunal case against the FCA, a decision that is facing an appeal, wrote to Alder setting out details of alleged opaque hiring practices at the regulator. Alder forwarded the unredacted correspondence to two other FCA officials in December and March and referenced a third who briefed others on the matter, according to the FT.
The FCA’s own guidance to whistleblowers states: “Your identity will not be revealed without your consent.”
In the email to Alder, the complainant asked for anonymity and referred to the organisation’s policy towards whistleblowers, which says: “We will do all we can to keep your identity secret … If it is necessary for anyone other than the original recipient of your disclosure to be aware of your identity, we will discuss this with you before your identity is disclosed.”
That discussion never took place, according to the whistleblower.
Georgina Halford-Hall, the chief executive of WhistleblowersUK, called on Alder to resign. “What this case really demonstrates is that the FCA hasn’t got its own house in order and therefore it casts serious doubt over whether it’s able to lead and deliver its duties as a regulator to those it regulates,” she told the FT.
Alder, 65, is a former chief executive of the Hong Kong Securities and Futures Commission. He was appointed to the £170,000-a-year, part-time FCA role by Nadhim Zahawi, when the former Tory MP was chancellor, joining in February 2023.
Harvey Knight, head of financial services regulation at Withers, the law firm, noted that this had been the second time that Alder had come under pressure in recent months. He was criticised for new proposals to name firms being investigated by the FCA even before they had been found guilty of any failings.
“What this shows is a shocking disregard for the standards they expect of the rest of the industry,” Knight said.
The FCA has been criticised before over its approach to whistleblowers. The Financial Regulators Complaints Commissioner rebuked it for revealing the identity of a whistleblower at Royal Bank of Scotland, now NatWest, to the bank, although the allegations “proved to be groundless”.
The Information Commissioner’s Office ruled last year that the FCA had breached data protection obligations after allegedly intercepting and diverting staff correspondence, including confidential whistleblowing emails, to keep track of people it considered a nuisance.
The FCA said: “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 approached for comment.
The treatment of whistleblowers is a sensitive issue for the FCA since it and the Bank of England jointly fined Jes Staley, the former chief executive of Barclays, £642,000 for improperly trying to ascertain the identity of a whistleblower in 2018.