Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Law360, London (May 24, 2021, 4:49 PM BST) -- Britain's finance watchdog probably handled 9% fewer reports from whistleblowers in 2020 because people working remotely during the pandemic were unable to detect illegal business practices in isolation, according to an analysis published on Monday.
Figures from the Financial Conduct Authority, obtained under a Freedom of Information request, show that the regulator received 1,073 reports from whistleblowers in 2020, a fall from the 1,179 submitted in 2019, global investigations consultancy Kroll said in its report.
The company said that this was the first fall in year-on-year figures since 2016, adding that the numbers had grown steadily between then and 2019.
The pandemic meant that most employees of financial services companies in Britain worked from home for most of 2020, which probably increased isolation, the consultancy said. Remote working could have also prevented employees from discovering questionable and illicit business practices, Kroll added.
"After a number of year-on-year increases in whistleblowing reports and an apparently growing culture of rooting out wrongdoing, the COVID-19 pandemic and ensuing remote working environment seem to have halted this progress," Benedict Hamilton, managing director of business intelligence and investigations at Kroll, said.
"It is highly likely that the reduced visibility which colleagues have over others is behind the drop," he added.
Kroll contrasted the decline in the number of reports filed at the FCA with an increase in those received by the U.S. Securities and Exchange Commission. Kroll said the SEC received more than 6,900 reports, which represents an increase of 32% from the 2019 financial year.
"Many U.S. states had limited or no lockdowns, and this may explain the continuing increase in reports, which had also been seen in the U.K. prior to 2020, as could the monetary incentives the SEC offered whistleblowers for coming forward," Kroll said.
Both the FCA and SEC were contacted for comment.
A paper published by the City watchdog last month found that financial companies disclosed that their systems are under strain from homeworking.
--Editing by Joe Millis.
For a reprint of this article, please contact email@example.com.