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15th May 2018
FCA and PRA jointly fine Barclays’ James Staley and impose special whistleblowing requirements
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have together fined Mr James Staley, Chief Executive of Barclays Group (Barclays). Mr Staley failed to act with due skill, care and diligence in the way he acted in response to an anonymous letter received by Barclays in June 2016. Barclays is also now subject to special requirements by which it must report annually to the regulators detailing how it handles whistleblowing, with personal attestations required from those Senior Managers responsible for the relevant systems and controls.
Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, said: “Protection for whistleblowers is an essential part of keeping the financial system safe and sound. Mr Staley’s behaviour fell below the standard we require, resulting in [this] fine and public censure. In addition, Barclays is now subject to special requirements to report to the PRA and FCA how it handles its whistleblowing cases in the coming years.”
Mr Staley attempted to identify the author of an anonymous letter received by Barclays in June 2016 that claimed to be from a Barclays shareholder. The letter contained various allegations, some of which concerned Mr Staley. Given his conflict, Mr Staley should have maintained an appropriate distance; he should not have taken steps to identify the author. Mr Staley should have explicitly consulted fully with those with expertise and responsibility for whistleblowing in Barclays and sought express confirmation from them that what he wanted to do was permissible. He failed to do this.
This is the first case brought by the FCA and PRA under the Senior Managers Regime. The investigation found that Mr Staley made serious errors of judgement. While he made no personal gain in this instance, both regulators viewed his misconduct as sufficiently serious for each to impose a penalty of 10 per cent of Mr Staley’s relevant annual income. Taking into account that he has settled at an early stage, Mr Staley has been fined a combined sum of £642,430. The FCA and PRA consider this to be appropriate and proportionate given the seniority of Mr Staley and the potential impact of the breach. In addition Mr Staley is censured by the publication of the regulators’ Final Notices.
In light of Mr Staley’s actions, the FCA and PRA have some concerns about the Firm’s whistleblowing systems and controls, and have concluded that these require enhanced monitoring and scrutiny. Barclays is, therefore, now subject to requirements by which it must report annually to the FCA and PRA, including any whistleblowing cases involving allegations made against its Senior Managers and any cases where Barclays has sought to identify any anonymous whistleblowers. These measures, which apply to all cases until the end of 2020, are the first of their kind applied to a regulated firm in relation to whistleblowing. Barclays agreed to the requirements.
Responding, John McFarlane, the Chairman of Barclays PLC, said: “The Board takes Barclays’ culture and the integrity of its controls extremely seriously. The Group’s whistleblowing processes are fundamental to ensuring that individuals feel comfortable raising concerns and are encouraged to do so. Having considered the findings of the FCA and PRA, the Board remains satisfied with its conclusions as set out in the Group’s announcement of 10 April 2017. Accordingly, the Board has now confirmed its decision of April 2017 and has made a very significant adjustment to Jes’s variable compensation on the recommendation of the Board Remuneration Committee.”
Jes Staley, Group Chief Executive Officer, said: “I have consistently acknowledged that my personal involvement in this matter was inappropriate, and I have apologised for mistakes which I made. I accept the conclusions of the Board, the FCA, and the PRA, following their respective investigations, and the sanctions which they have each applied.”