May 25, 2016

Question of the Week: Do U.S. Whistleblowers Require More Financial Incentives Than Their Counterparts in the U.K. or Australia?

By the C|C Whistleblower Lawyer Team

America’s whistleblower programs are fairly unique in offering a financial reward to whistleblowers.  Other nations, including Great Britain and Australia, have been reluctant to offer financial incentives for whistleblowers to come forward.  Authorities in those countries contend that it is enough to rely on a person’s sense of civic duty to report corporate malfeasance.  Indeed, some authorities have suggested that financial rewards do not work and might even be counter-productive.

The U.K. Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) said in 2014 that it could see “no empirical evidence of incentives leading to an increase in the number or quality of disclosures.”  Creating financial incentives would represent “a substantial shift in UK policy norms, which are very different to those in the US.”  More forcefully, the same report warned against the “moral and other hazards” caused by offering financial rewards to whistleblowers in the financial sector, including the danger that “paying significant sums to high-income individuals for fulfilling a public duty could reinforce perceptions that the financial sector is at odds with the rest of society, particularly given the Government’s decision not to introduce financial incentives for whistleblowers generally.”  Other bodies have also questioned whether financial rewards are a significant incentive.  The Quebecois financial authority, for example, recently studied various countries’ programs and concluded that “the protection of confidentiality is what primarily motivates whistleblowers to report incidents.” 

However, it seems not everyone thinks a strong sense of civic duty is sufficiently motivating.  Last month, the Australian senate economics committee called for the creation of financial incentives (leading to an immediate backlash).  Further, there are already (small) financial rewards for some whistleblowers in the U.K., including under the Crimestoppers and CMA cartel whistleblower programs.  It seems that even some British officials think certain financial rewards are incentivizing.  Also, international whistleblowers can already take advantage of the financial incentives in U.S. whistleblowing programs—and they do, readily.  So maybe the alleged difference in “policy norms” between the U.S. and other countries is not that big after all.

What do you think?  Do British and Australian whistleblowers have different motivations than their U.S. counterparts? Vote and leave a comment to tell us what you think!

Do U.S. Whistleblowers Require More Financial Incentives Than Their Counterparts in the U.K. or Australia?

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One Response to “Question of the Week: Do U.S. Whistleblowers Require More Financial Incentives Than Their Counterparts in the U.K. or Australia?

  1. In our research, we find that financial incentives for whistleblowing (when provided internally by the company) have varying effectiveness on increasing whistleblowing intent (this is for WB on asset misappropriation). Incentives work to increase an employee’s trust in the organization, but only when the organization protects them from retaliation. When the organization allows retaliation, financial incentives lower trust, and work against WB likelihood.

    In another study, we found that WB are more likely to report on superiors than on peers when the organization takes reports seriously. When the organization doesn’t take reports seriously, reporting on peers is more likely.
    Whistleblowing in Audit Firms: Organizational Response and Power Distance
    Eileen Z. Taylor and Mary B. Curtis
    Behavioral Research in Accounting Oct 2013, Vol. 25, No. 2 (Fall) pp. 21-43