Tom Stocker

In its latest annual business plan the SFO lists “progress whistleblower incentivisation reform” as one of the SFO’s planned outputs for the year 2025-26. That output is linked to a stated desired outcome of combatting crime effectively through intelligence, enforcement and prevention.

In the UK, whistleblowers are protected under the Public Interest Disclosure Act 1998. The legislation ensures that individuals who disclose information about wrongdoing in the workplace are safeguarded from retaliation.

However, critics argue that the existing laws do not go far enough to protect whistleblowers and that more needs to be done to encourage individuals to come forward with information about wrongdoing. The introduction of a corporate whistleblower rewards pilot programme in the US last year has prompted renewed calls for reform in the UK.

Whistleblower financial incentives are a feature of US white collar and corporate criminal enforcement, but it would represent a significant policy shift in the UK where there is a reticence about the reliability of incentivised reports, and concern that it risks incentivising mischief-making and false reports as well as genuine reports.

The SFO knows that any proposal to incentivise whistleblowers will be controversial and I would anticipate it will take a staged approach with there being a consultation, potentially followed by a pilot scheme.

The SFO also confirmed plans to “promote” the new offence of “failure to prevent” fraud, which will come into force on 1 September under the Economic Crime and Corporate Transparency Act 2023. Under the new offence, large organisations face criminal liability if they fail to prevent outward frauds intended to benefit the organisation or a client of the organisation - unless they have reasonable procedures in place to prevent fraud by associated persons of the business.

Effective internal whistleblowing process are highlighted in the Home Office’s guidance to organisations on the procedures they should be putting in place in advance of September. A fraud risk assessment and top-level commitment to an anti-fraud culture are also important features of the government’s guidance.

In advance of 1 September, the SFO will also publish an updated guide on corporate co-operation which should address the SFO’s expectation on the conduct of internal investigations by businesses into whistleblowing reports, and which will seek to encourage corporate self-reporting, which has slowed as businesses have questioned the merits and costs associated with self-reporting in England and Wales.

Scotland’s Crown Office and Procurator Fiscal Service has a distinct and less penal self-reporting regime for corporate bribery. An expansion of this regime to cover fraud and to incentivise corporate self-reporting would be a measure that would boost the effectiveness of the new organisational “failure to prevent” fraud offence in Scotland.

In the meantime, businesses should be conducting fraud risk assessments and considering the effectiveness of their fraud prevention and whistleblowing measures.

Tom Stocker is a partner at Pinsent Masons