Boardroom Briefing July 2019

Boardroom Briefing
Company Whistleblowers – action and insurance implications for the new regime

Everything you know about your company’s whistleblower protocols will now need a rethink and overhaul.  A strengthened and expanded regime comes into effect this year from 1 July for corporate, financial and credit sectors with protections extended to a broader class of people and a greater variety of disclosures. 
Existing protections for the reporting of corruption, fraud, tax evasion, and misconduct have been amended- so don’t rely on the company’s old protocol - and this means there is a: 

  • Widening of the category of whistleblowers eligible for protection to cover an employee or officer, ex-employee or ex-officer, those supplying goods and services (paid and unpaid), an associate and a spouse, child or dependent of these categories.  
  • Allowing for and protection of anonymous disclosures.
  • Narrowing of the category of people whistleblowers can report to, being senior managers and officers, or externally to ASIC and APRA.
  • Expanding the types of wrongdoing whistleblowers can make disclosures about although there is now a carve-out for disclosures about “personal work-related grievances” which will be dealt with under current employment laws.
  • Replacing the existing good faith test, with that the whistleblower has “reasonable grounds” to suspect misconduct, breaches of legislation, danger to the public or financial system or a “systemic issue”. 
  • Easing of the way for whistleblowers to be compensated for victimization, such as harassment or dismissal. 
  • Necessitating that public and large proprietary companies have a policy in place from 1 January 2020, with criminal penalties for non-compliance.
  • Providing for “public interest disclosures” to parliament and journalists based on a broad public interest test.
  • Increasing penalties for both individuals and companies around confidentiality breaches and non-victimization protections. 

In brief: Our Lockton broker can help you manage the potential for: 

  • More notifiable circumstances under your Professional and Financial Risks policies, so that your whistleblower protocol should be linked to your Professional and Financial Risks protocol. 
  • Heightened insurer expectations around comprehensive protocols and processes for identification, escalation, assessment, investigation, and reporting of concerns.
  • Increased exposure of the company to larger fines and penalties. 
  • Increased exposure to the reputational damage of the company. 
  • More claims against the company and its directors and officers. 
  • More ASIC, and other regulatory authorities, actions against the company particularly in our post-Royal Commission environment with ASIC’s new “why not litigate?” approach.

Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth)  

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