• Professional News
  • 26 February 2014

New bill on whistleblowing introduced

The bill implementing the Capital Requirements Directive IV, including the rules on mandatory whistleblower schemes in the financial sector, has now been tabled in the Danish Parliament. The bill clarifies, for example, which offences may be reported and who may report.

On 7 February 2014, the Danish Minister for Business and Growth Henrik Sass-Larsen tabled Bill no. 133 implementing the provisions of the Capital Requirements Directive (CRD IV) package (Lovforslag nr. 133 til Lov om ændring af lov om finansiel virksomhed og forskellige andre love i Folketinget). The bill includes, for example, provisions on mandatory whistleblower schemes in financial sector businesses.

As a consequence of a number of responses to the consultation paper, several key points of the bill have been adjusted as compared to the original draft bill, which was put out for consultation in the autumn of 2013.

According to the proposed bill, the provisions on whistleblower schemes will be implemented as sections 75 a and 75 b of the Danish Financial Business Act (lov om finansiel virksomhed).

See also Deadline for notification of whistleblower schemes and Deadline for notification of whistleblower schemes extended.

Who may report?
According to the bill, employees of financial sector businesses must be able to report financial regulation violations under whistleblower schemes.

As opposed to the consultation paper, board members will no longer be included in the group of persons who, on a mandatory basis, must be admitted to report violations under whistleblower schemes. However, persons other than employees may be admitted to report violations under whistleblower schemes.

Which offences may be reported?
According to section 75 a of the bill, it must be possible to report any “violation or potential violation of the financial regulation”.

The original draft bill did not specify the scope of “the financial regulation”. In the explanatory memorandum to the proposed bill, it is laid down that “the financial regulation” includes regulation which belongs under the field of responsibility of the Ministry of Business and Growth Denmark and which is supervised only by the Danish Financial Supervisory Authority (FSA).

Consequently, regulation which is supervised by the Danish FSA as well as other supervisory authorities is not included in the concept of "the financial regulation" in respect of the part of the regulation which does not belong under the supervision of the FSA, such as the Danish Payment Services and Electronic Money Act (lov om betalingstjenester og eletroniske penge).

Lower threshold
The whistleblowing provisions of the bill target all businesses subject to the financial regulation and not only businesses subject to the provisions of CRD IV targeting the banking sector.

Based on the responses to the consultation paper, the Ministry of Business and Growth Denmark has introduced a lower threshold when it comes to the requirements of setting up whistleblower schemes. As a result, businesses with five employees or less are not subject to the requirement of setting up whistleblower schemes. This exemption does not include businesses subject to the provisions of CRD IV as CRD IV does not provide for the exemption of small businesses from the requirement to set up a whistleblower scheme.

Anonymity guaranteed
The bill specifically states that whistleblowers must be able to anonymously report offences under the whistleblower schemes. 

It is up to each business to set up a scheme ensuring anonymity, for example by way of an Intranet address to which whistleblowers may report any offences without leaving any identifying information that may trace back to the whistleblower or his IP address.

Whistleblower protection and compensation
According to the new section 75 b of the bill, any employee reporting a potential offence under the whistleblower scheme will enjoy protection against unfavourable treatment or consequences owing to the reporting made.

Any business compromising this principle must pay compensation to the employee calculated in accordance with the principles of the Danish Equal Treatment Act (ligebehandlingsloven).

Under the standard employment law rules, however, any abuse of the whistleblower scheme may result in sanctions, such as a warning, termination or dismissal, depending on the seriousness of the offence.

Effective from March and June
The bill is intended to become effective as from 31 March 2014. The provisions on mandatory whistleblower schemes will, however, not become effective until at a time determined by the Danish Minister for Business and Growth, which is expected to be 1 June 2014.

The first reading of the bill took place on 25 February 2014. We will follow the developments closely and update our website if significant changes are made to the bill.

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