Why it’s time whistleblowers were paid for their trouble

From the NHS to the Square Mile, corporate insiders face career-ending risks for speaking out about wrongdoing. Instead, they should be incentivised, writes James Moore

NHS bosses have made noises about encouraging whistleblowers – but their actions suggest otherwise (PA Wire)

Actions speak louder than words, but inactions can be deafening. Just ask any whistleblower.

The NHS workers who tried to raise the alarm over Lucy Letby – found guilty last month of murdering seven babies – will forever regret their suspicions not being listened to.

According to Dr Chris Day, who has long campaigned for statutory whistleblowing protections for junior doctors, told the Guardian: “[The Letby case] is an extreme example of the consequences of the NHS’s poor speak-up culture.” Under-fire health service bosses have promised to learn “every possible lesson” from the incident, including a pledge to heed staff concerns.

But if we really want to encourage whistleblowers, not only do they need stronger legal protections – they need to be paid, as sometimes happens in the US.

Let’s turn to the financial sector. They might seem worlds apart, but banking, like the NHS, serves a highly important function in society and is similarly prone to scandals that leave trails of devastation in their wake.

You tend to hear very similar hand-on-heart claims about learning lessons and heeding whistleblowers in this arena when those scandals emerge.

To encourage people to speak up, America’s Securities & Exchange Commission has long offered financial rewards. In May, it announced its largest to date, paying out some $279m (£223m) through its whistleblower policy. Under this scheme, the regulator awards between 10 and 30 per cent of any monetary sanctions imposed on miscreants to those supplying the information for it to bring cases when the sanctions exceed $1m.

This is the sort of thing that has UK regulators drawing air in through their teeth. I once raised the issue of payment with a very senior one. Their response? “Should we really pay people for doing the right thing? For doing what they should be doing as a matter of course?”

The Community Action Trust has long offered modest financial recompense to people who “do the right thing” and supply information through Crimestoppers that leads to the arrest and conviction of criminals. So, the principle has been established.

By contrast, the Financial Conduct Authority has an email address, a postal address, and even a whistleblowing hotline. But there’s no reward.

I’ve heard claims about how terribly successful the latter is. Maybe so. But you may also recall – and people who work in banking certainly do – how former Barclays CEO Jes Staley went to great lengths to try and unmask a whistleblower at his bank but nonetheless kept his job. Yes, he ended up £1.1m out of pocket – partly through regulatory penalties, partly through clawback imposed by the bank. But that was eminently bearable in the context of a salary package worth £4.5m during the year in question.

As with the NHS, the pressure on bank staff to look the other way and/or cover things up is very strong. So, oftentimes, they do. They look away because they know that despite the policies and procedures in the employee handbook and on the staff intranet, blowing the whistle could put their careers, and their standards of living, at risk.

Offering some level of compensation might encourage people stand firm in the face of this. It would also help them get back on their feet. It might be enough to sway the odd waverer, and that might save livelihoods (in banking) and lives (in the NHS).

I’m not here arguing for multi-million pound settlements in either, or in any other field where we need people to sound the alarm when things go wrong. Financial recoveries and penalties tend to be much lower here, while the NHS is perennially strapped for cash.

But, think about it a moment. Rewarding whistleblowers might actually help with the latter by cutting down on the number of negligence and/or malpractice lawsuits the NHS faces.

No, this isn’t a cure-all. But it would serve as a statement of intent. It would say: “This time we mean it when we say we want to fix things.”

The reason I doubt we’ll see it happening is because, I am afraid, I doubt there is any real desire to see more people stepping forward. And the net result will be more scandal and more terrible consequences.