The chairman of the Financial Conduct Authority (FCA) has been found to have breached the organization’s whistleblower rules by disclosing the identity of a whistleblower to senior colleagues, according to a report released today. The investigation also uncovered that a second whistleblower had faced similar treatment.

These revelations regarding Ashley Alder’s conduct were detailed in a report authored by Richard Lloyd, the FCA’s senior independent director.

Lloyd concluded that while Alder did not adhere strictly to the whistleblower policy, his actions were deemed “reasonable” based on his belief that there was little risk of harm to the whistleblowers involved.

The report mentioned that a second whistleblower had also come forward since the first complaint was disclosed last month, expressing concerns about their compromised right to anonymity.

The initial case involved Alder forwarding emails from a whistleblower—who was a former FCA employee dismissed in 2021 for alleged misconduct—containing the whistleblower’s name and specific concerns without redaction, which deeply upset the individual.

The whistleblower had explicitly requested anonymity in previous correspondence with Alder, referencing the FCA’s guidelines which state, “Your identity will not be revealed without your consent.”

Alder allegedly forwarded unredacted emails to other FCA officials over two instances, prompting concerns about the handling of sensitive information.

According to Lloyd’s findings, Alder believed that by sharing the information with relevant colleagues, he was discussing matters that the recipients were already aware of, aimed at obtaining advice and ensuring proper handling of the issues raised by the whistleblowers.

Lloyd noted that although Alder did not strictly follow policy protocols—such as obtaining consent before seeking internal legal advice—his intentions were to facilitate appropriate responses to the complaints.

Alder, who has served as FCA chairman for 18 months, emphasized his commitment to the responsibilities pertaining to whistleblowers, stating that these were complex situations involving former employees who had raised multiple issues over time. He expressed the necessity of consulting a limited number of senior colleagues while ensuring confidentiality.

Legal experts have criticized the FCA for not upholding the standards it imposes on the industries it regulates, highlighting the serious implications of improperly revealing whistleblower identities. Notably, the FCA and the Bank of England previously fined Jes Staley, the former CEO of Barclays, £642,000 for attempting to uncover a whistleblower’s identity.

In response to these findings, the FCA announced it is reviewing its whistleblower policy and has reminded board members and senior managers of the existing guidelines.

Understanding the Context

Investigating whistleblower allegations presents challenges, particularly when trying to maintain confidentiality. The FCA’s chairman, Ashley Alder, has run into difficulties given the commitment to protect whistleblower identities.

While Alder has been found to have breached these rules, Lloyd’s report refrains from directly labeling his actions as a violation, stating he simply “did not follow the letter of the rules” even while describing his actions as reasonable. This type of leniency is unlikely to be extended to regulated firms when they stray from compliance.

The situation is expected to prompt a review of the FCA’s whistleblowing code of conduct, likely clarifying policies to ensure that non-executive directors have appropriate access to internal advice during similar situations in the future.