Financial services sector might introduce whistleblowing system
In case employees in the Danish financial services sector know of criticisable affairs or wrongdoings in the enterprise, they should be able to report it. Such a whistleblowing system may become a reality if the European Parliament adopts the Market in Financial Instruments Directive (MiFID).
The financial crisis has brought to light unfortunate problems in the financial services sector in the entire Europe. The European Commission has assessed that a requirement for whistleblowing systems may be the solution to the problem.
It will imply that financial enterprises will be required to introduce appropriate procedures enabling the employees to report actual or potential wrongdoings of the enterprise. These procedures must include an external hotline independent of the enterprise.
The Directive does not specify the entities which will be affected in the financial services sector. There are, however, indications that the MiFID Directive will apply to more or less all enterprises in the sector. This is an extension of the areas of application of the Capital Requirements Directive (CRD) and the Market Abuse Directive (MAD).
Role of the Danish Data Protection Agency
Today a whistleblowing hotline must be registered with the Danish Data Protection Agency. Moreover, the hotline must be confined to subjects such as violations of the law which include:
- economic crime (e.g. bribery, fraud, forgery)
- accounting, auditing, internal reviews
- banking / financial corruption
- any issues relating to serious work-related accidents
- safety issues
- serious problems such as assault and sexual abuse.
It is not yet clear which authority is to be in charge of the overall administration of the system.
The Council of Ministers is expected to vote on the proposal around the turn of the year, and then the system will become a reality within two years from the adoption.
IUNO's opinion
Any enterprise in the financial services sector should be attentive to the proposed directive and to its implementation into Danish law. If the proposed directive becomes a reality, we recommend that the enterprise gives its employees a thorough guidance on the whistleblowing system it sets up.
[Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on markets in financial instruments repealing Directive 2004/39/EC of the European Parliament and of the Council]
The financial crisis has brought to light unfortunate problems in the financial services sector in the entire Europe. The European Commission has assessed that a requirement for whistleblowing systems may be the solution to the problem.
It will imply that financial enterprises will be required to introduce appropriate procedures enabling the employees to report actual or potential wrongdoings of the enterprise. These procedures must include an external hotline independent of the enterprise.
The Directive does not specify the entities which will be affected in the financial services sector. There are, however, indications that the MiFID Directive will apply to more or less all enterprises in the sector. This is an extension of the areas of application of the Capital Requirements Directive (CRD) and the Market Abuse Directive (MAD).
Role of the Danish Data Protection Agency
Today a whistleblowing hotline must be registered with the Danish Data Protection Agency. Moreover, the hotline must be confined to subjects such as violations of the law which include:
- economic crime (e.g. bribery, fraud, forgery)
- accounting, auditing, internal reviews
- banking / financial corruption
- any issues relating to serious work-related accidents
- safety issues
- serious problems such as assault and sexual abuse.
It is not yet clear which authority is to be in charge of the overall administration of the system.
The Council of Ministers is expected to vote on the proposal around the turn of the year, and then the system will become a reality within two years from the adoption.
IUNO's opinion
Any enterprise in the financial services sector should be attentive to the proposed directive and to its implementation into Danish law. If the proposed directive becomes a reality, we recommend that the enterprise gives its employees a thorough guidance on the whistleblowing system it sets up.
[Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on markets in financial instruments repealing Directive 2004/39/EC of the European Parliament and of the Council]