Financial Consumer Agency of Canada Opens Consultation on Bank Whistleblowing Policies and Procedures
On December 15, 2021, the Financial Consumer Agency of Canada (“FCAC”) issued a proposed Guideline on Whistleblowing Policies and Procedures for Banks and Authorized Foreign Banks (the “Guideline”). The proposed Guideline sets out FCAC’s expectations with respect to banks’ and authorized foreign banks’ implementation of the new whistleblowing provisions in Part XVI.1 of the Bank Act as they relate to the new Financial Consumer Protection Framework (“FCPF”) (see our blogpost series on the FCPF), which is scheduled to come into force on June 30, 2022.
Banks should also ensure that any third parties subject to the requirements in s. 627.15 of the Bank Act comply with the Bank’s whistleblowing policies and employees of third parties should be able to report wrongdoing as if they are employees of the Bank or the third party. FCAC is also encouraging other federally regulated financial entities, such as trust and loan companies and insurance companies, to review the proposed Guideline and develop or improve their whistleblowing policies and procedures.
This is the third consultation in a series of consultations on guidelines that FCAC has developed in support of the FCPF, the two previous consultations being related to Complaint-Handling Procedures for Banks and Authorized Foreign Banks and Appropriate Products and Services for Banks and Authorized Foreign Banks (please refer to our earlier blog post for more details regarding these two guidelines).
Key Principles of a Bank’s Whistleblowing Policies and Procedures
The Guideline provides three key principles Banks will be expected to consider when developing their whistleblowing policies and procedures:
- Effectiveness – In order to be effective, a Bank’s whistleblowing policies and procedures should demonstrate organizational commitment, deal with investigating reports of wrongdoing and employee training. Policies and procedures should:
i. Describe the process for dealing with reports of wrongdoing.
ii. Indicate that investigations will be conducted in an appropriate, fair and impartial manner.
iii. Encourage employees to report wrongdoings and provide for a Bank issued statement in support of the reporting of wrongdoings and prohibiting retaliation.
iv. Provide that adequate financial, technical and human resources are to be allocated to deal with reports of wrongdoing.
v. Provide for the appointment of one or several employees working closely with senior management to oversee the development and implementation of the policies.
vi. Be regularly reviewed with a view to improving them.
vii. Include a commitment to regularly train employees with regards to changes in legislation/regulations and all aspects of the Bank’s policies, with the aim of encouraging reporting.
- Accessibility - A Bank’s whistleblowing policies and procedures should be easy for employees to find, navigate and understand. In particular, the policies should:
i. Describe the steps that will be taken by the Bank once it receives a report, in conducting fair investigations and reporting investigation results and include a commitment that reports will be dealt with in a confidential and timely manner.
ii. Indicate how the Bank will ensure that its employees are aware of their ability to report wrongdoings and of the resources available to them in reporting wrongdoings.
iii. Be written in clear and simple language, and include the definition of the term “wrongdoing” as well as provide examples of wrongdoing.
iv. Document how employees can access confidential advice. The confidential advice should be provided by a senior officer or an external and independent body such as a whistleblowing hotline.
v. Indicate that employees are not required to report internally at the Bank and can instead report directly to any government agency or body that regulates or supervises financial institutions, such as the Commissioner of the FCAC or OSFI, or a law enforcement agency. The contact information of OSFI and FCAC should be provided in the policies.
vi. Include information regarding other channels employees can use to make complaints that are not considered a report of wrongdoing.
- Protection - A Bank’s whistleblowing policies should demonstrate how employee confidentiality (e.g. identity and information that could lead to an employee’s identity) will be maintained throughout the whistleblowing process and how the Bank protects employees against retaliation. Policies and procedures should also:
i. Indicate that employees have the ability to make anonymous reports of wrongdoing.
ii. Provide safeguards against the misuse of information that could reveal an identity of employees.
iii. Outline any exceptions to confidentiality, such as when the Bank may disclose the identity of an employee to a government agency or law enforcement agency and, in such cases, indicate that employees will be informed of such disclosure.
iv. Provide measures to protect against dismissing, suspending, disciplining or otherwise disadvantaging an employee for reporting a wrongdoing.
Lastly, during the investigation of a report of wrongdoing, Banks may identify breaches of consumer provisions. The Guideline provides that Banks should assess whether such breaches should be reported to FCAC as outlined in the Mandatory reporting guide for federally regulated financial institutions. If the breach is reported to FCAC, the Bank must identify that it became aware of the breach through a whistleblowing report.
FCAC is inviting comments on the proposed Guideline until January 29, 2022.
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