In a Law360 article, Phillips & Cohen partner Erika Kelton talks about what replacing the UK Financial Reporting Council (FRC) with the new regulatory agency, the Audit, Reporting, and Governance Authority, could mean for whistleblowers.
Erika Kelton, a senior partner at Phillips & Cohen LLP who represents corporate whistleblowers in the U.K. and the U.S., described the FRC’s approach to whistleblowing as “quite backward.” It is essential that the new regulator includes a robust process that motivates employees to come forward with reports and protects them, she said.
“I find it astounding the FRC policy requires whistleblowers to submit information in writing, but that the whistleblower won’t be interviewed by the regulator’s staff,” Kelton said. “The new organization needs to take a very close look at their existing policies and not just import them.”
Whistleblowers are particularly useful in exposing sophisticated accounting frauds that regulators otherwise would not uncover, Kelton said, adding that financial regulators in the U.S. have described their programs — which offer protection, confidentiality and rewards — as “game changers” in enforcement. “A whistleblower reward program with the new regulator would have a similar impact,” she said.
Read the article, “New UK Watchdog Poised To Take On Embattled Audit Sector,” on Law360’s website (subscription required).