In the UK, various cases have focused attention on the role of informants who expose malpractice in the financial sector. This article argues that the next year will shine more light on the fate of people who draw attention to abuses, or who claim to do so.

Recent years have seen a growing recognition by legislators, policymakers, and regulators of the important public interests served by telltales, a process which gathered greater speed after the 2008 financial crisis revealed how ignorant regulators were of some questionable conduct at some of the world’s most systemically important financial institutions.  More recently still, a raft of allegations of sexual and other personal misconduct against senior figures in the media, arts, journalism and business sectors has shown businesses how important it is to protect people who speak out when they see something going wrong. 

The UK’s Public Interest Disclosure Act 1998 provides the primary protection for informants who – in what otherwise would be a breach of confidence, perhaps leading to dismissal – raise concerns about matters of public importance at work. 

At regulated financial service firms such informants are, at least in theory, protected by more than the letter of the law. Each firm is required to have clear processes in place to ensure that internal complaints are kept confidential and that the complainants are not subject to retaliation. Jes Staley, the chief executive of Barclays plc, is under investigation by a host of regulatory agencies including the UK Financial Conduct Authority and the New York Department of Financial Services because someone alleged that he had tried to unmask an informant's identity by putting pressure on the bank’s own compliance and investigations team.

Although these legislative and regulatory initiatives are welcome, there is a growing debate over the extent to which protection from reprisals incentivises whistleblowers to come forward. This is a particular problem for financial services, where telltales nearly always have to give up substantial earning opportunities if they want to serve the public interest.

In the United States, legislators have attempted to address this issue through the introduction of a statutory reward scheme for tipsters. The US Dodd-Frank Act contains penalties for firms that try to 'retaliate' against them and says that if a tip leads to successful enforcement action, the tipster will be entitled to between 20% and 30% of any financial penalty that the authorities impose on the relevant firm. This can result in very significant sums. The largest figure awarded under Dodd-Frank so far is $30 million.

The US Securities and Exchange Commission (the leading federal financial services 'conduct' regulator) has pointed to the 'transformative' effect of offering monetary awards (a 'game changer,' in the words of Mary Jo White, the former SEC chair).  The SEC’s report to Congress, made last month, shows that the number of tips it has received has grown exponentially since the Act came in, encouraging disclosures from people all over the United States, and internationally - particularlyin  Canada, Australia, and the UK (in fact, one of the largest awards to date was made to someone outside the US). 

The fact that the SEC has made provision for in excess of $200 million for awards in its next financial year shows that its regime is in rude health.

Despite this evidence, in the UK the FCA and the Prudential Regulation Authority have declined to follow suit. A study in 2014 suggested that there was no evidence to support the contention that monetary awards led to better enforcement results. It is doubtful that that conclusion would survive comparison with the recent experience of the SEC. The report - perhaps in line with the attitudes of society as a whole - oozes distaste for payments to informants.

A recent Australian proposal seeks a middle way. The Joint Parliamentary Committee on Corporations and Financial Services has proposed a scheme whereby payments could be sanctioned by a court, legitimising the awards in the eyes of the wider public while still doing the job of persuading people to come forward with their stories. 

Whether those proposals find their way into Australian law remains to be seen, but they arguably represent a neat way in which to resolve competing public interests.  Lord Cromwell, the co-chairman of the UK's all-party Parliamentary Group for Fair Business Banking, has recently expressed some sympathy for payments to tipsters; his committee is to investigate the subject and will no doubt will be watching the progress of the Australian proposals with interest. Any similar law in the UK would require a change of heart on the part of the regulators, so it is unlikelyto appear for some time.

Where does that leave the protection of informants in 2018? Much may depend on the reaction not only to Jes Staley’s case, but also to how society responds to the rising tide of public allegations of improper behaviour by powerful men in the workplace. That debate may well encourage financial firms to create safe spaces in which people can tell their stories, be that through further legislation, financial incentives or better bureaucracy.