The Financial Conduct Authority was found in favour by an employment tribunal on two out of three claims made against it by a whistleblower who alleged the regulator ignored his warnings over high street banks’ ‘undercapitalisation’ around the time of the financial crisis.
At a hearing in East London which lasted 19 days, Judge Massarella dismissed whistleblower Walker Sigismund’s claims of detriment and automatic unfair dismissal on the grounds that he made public interest disclosures.
“In making these disclosures, the claimant contrived to position himself as a whistleblower in the belief that this would protect him from redundancy,” the tribunal heard.
His third claim of ordinary unfair dismissal - which is when an employer breaches a worker’s contract rather than their statutory employment rights - did succeed. This was because the tribunal found the FCA to have “acted unreasonably” by deciding “not to engage” with Sigismund’s ground of appeal - that he was dismissed for being a whistleblower.
"The claimant was ‘denied the opportunity of showing that the real reason for dismissal was not sufficient'," the tribunal said. "It may well have made no difference to the outcome; but the authorities are clear that that is a matter of remedy."
The reserved judgement, published on October 6, said Sigismund was entitled to compensation. If he and the FCA do not agree on a compensation amount, there will be a further remedy hearing to calculate it.
At the hearing, 15,710 pages of agreed documents were presented alongside what the tribunal called “an unagreed supplementary bundle” of 12,777 pages.
The tribunal said the bundles were so big that the FCA had to provide laptops for the lay members and the witness table, with the bundles preloaded onto them.
“A single hard copy stretched from one side of the tribunal room to the other…It is unclear how such a manifestly disproportionate bundle came to be created,” the tribunal noted.
The ‘Harm Metric’
Sigismund was employed by the FCA for 18 years, from October 2006 to October 2018. He started off as a manager within the risk department.
Before joining the FCA, which was then known as the Financial Services Authority, Sigismund had worked at various banks, including HSBC and Natwest. He claimed to have “tr[ied] to correct malpractice” at these employers, that he “blew the whistle on hidden losses” and “trained risk managers to do the same”.
At the FCA, Sigismund created what he later coined the ‘Harm Metric’. Designed to be a metric of consumer harm posed by financial institutions, it switched the focus from a firm’s default point to their distress point, focusing on the losses which occurred before default. His idea was to create “an early warning system”.
Initially, Sigismund garnered some support for his ‘new’ method. His boss until 2013, Lyndon Nelson, said in an email sent back in November 2007 that Sigismund’s ‘Harm Metric’ data “would tend to show that Northern Rock was in breach, or likely breach, of minimum capital requirements in December 2006”.
