The FCA and the PRA have together fined Barclays Group chief executive James Stayley, a total of £642,430. 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.
FCA executive director of enforcement and market oversight Mark Steward said: “Given the crucial role of the Chief Executive, the standard of due skill, care and diligence is more demanding than for other employees.
“Staley breached the standard of care required and expected of a chief executive in a way that risked undermining confidence in Barclays’ whistleblowing procedures. Chief executives must act with a high degree of care and prudence at all times. Whistleblowers play a vital role in exposing poor practice and misconduct in the financial services sector. It is critical that individuals are able to speak up anonymously and without fear of retaliation if they want to raise concerns.”
PRA deputy governor for prudential regulation and chief executive officer Sam Woods said: “Protection for whistleblowers is an essential part of keeping the financial system safe and sound. Staley’s behaviour fell below the standard we require, resulting in today’s 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.”
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 Staley. Given his conflict Staley should have maintained an appropriate distance; he should not have taken steps to identify the author. 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.
The investigation found this to be a breach of the requirement to act with due skill, care and diligence (Individual Conduct Rule 2) but not a breach of the requirement to act with integrity (Individual Conduct Rule 1).
As CEO, the FCA said Staley should have identified that he had a conflict of interest in relation to the letter, and needed to take particular care to maintain an appropriate distance from group compliance’s investigation.
Further, the regulator said he should have realised there was a risk he would not be able to exercise impartial judgement in relation to how Barclays should respond.
This is the first case brought by the FCA and PRA under the Senior Managers Regime. The investigation found that 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 Staley’s relevant annual income. Taking into account that he has settled at an early stage, Staley has been fined a combined sum of £642,430.
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