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In light of ASIC calling on Australian CEOs to review whistleblower policies, now is the time to ensure you comply with the rules.
Reminds entities of their obligation to have a whistleblower policy that reflects the strengthened whistleblower protection regime that started on 1 July 2019
identifies where policies in ASIC's sample fell short, and
highlights what entities can do to improve their policies.
Snow White, she of seven dwarves fame, believed that whistling while you work was a sure-fire way to make your chores go faster. But can the same be said for whistleblowing? If you call out bad behaviour, do you also have to call time on your career? Or can you actually whistleblow while you work?
What is whistleblowing?
Whistleblowing is the reporting of illegal or unethical conduct or behaviours undertaken by individuals or organisations. Whistleblowers are the people who expose the wrongdoings (or their concerns about certain activities) to either the relevant authorities, or to the general public. Whistleblowing is often done anonymously or under strict terms of confidentiality.
Why do we need whistleblowers?
Financial crime is a significant global issue that requires defences across all fronts. Whistleblowers are a crucial tool in the fight against these crimes because they often have inside information which is essential for fighting such crimes. But they are also typically either employees of an organisation or have close dealings with an organisation they believe is behaving questionably.
This puts whistleblowers in a vulnerable position and they may be subject to pressures to remain silent, such as threats of violence or loss of employment.
How do we protect whistleblowers?
In order for whistleblowers to feel confident enough to speak out, they need to believe that they will be protected. To create such an environment, there needs to be both public protection (through legislation and enforcement) as well as internally managed processes, ie: companies need to have their own policy in relation to whistleblowing.
In July 2019, the Federal Government introduced new legislation to address serious gaps within the financial services sector’s existing regulatory approach to whistleblowing. The new regime covers the corporate, financial and tax sectors, with the aim of encouraging ethical whistleblowing and discouraging white collar crime, while holding employers accountable for protecting eligible whistleblowers.
Later that year, ASIC issued its own guidance for companies to assist them to implement and maintain compliant whistleblower policies. At a minimum, ASIC expects that the written whistleblower policy be communicated internally and to all the organisation’s stakeholders, and that procedures be put in place to enable staff to confidentially disclose information if they feel there is wrongdoing.
Recently ASIC reviewed a select sample of whistleblower policies and is concerned the majority of those policies did not fully address the relevant requirements. Hence ASIC's call-out to CEO's to review their policies.
What does a whistleblower-friendly workplace look like?
Research shows that company culture greatly affects a person’s willingness to become a whistleblower. When staff have a clear understanding of good behaviour, it is easier to identify wrongdoing and far more likely that it will be reported and dealt with. In order to cultivate the right behaviours, companies must:
provide training covering three key areas – how to raise a concern, how staff will be protected, and how the concern will be dealt with
ensure company officers and managers are trained in dealing with disclosure and supporting their employees
ensure all management understand the systems and processes to support the members of their team.
So, should you blow the whistle?
The industry has come a long way in its treatment and protection of whistleblowers. Community expectations are also shifting towards an expectation of accountability from directors and senior managers. The public attitude is moving towards the expectation that corporates will go beyond mere compliance and model ‘good behaviour’ across a range of issues as the importance of social license increases.
For companies this means not only ensuring compliance obligations are met, but also helping to engender a culture of best practise, ethics and integrity in all their operations. In this way, individuals working inside an organisation will be empowered to come forward and stand up to wrongdoing and this will, in turn, engender greater trust in the sector from the general public. While it may not make you work faster, the right approach to whistleblowing will certainly make the work of the entire sector go smoother.
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Originally published April 29, 2020, updated October 14, 2021