For many years, the Serious Fraud Office (SFO) has been encouraging companies to self-report wrongdoing. Its success has been variable.
Since they were introduced as an alternative means of disposal of criminal proceedings, most of the SFO's Deferred Prosecution Agreements (DPAs) have involved a self-report of some kind from the corporate involved. This has led to billions of pounds of penalties paid into the UK Treasury.
The SFO has now announced a potential whistleblowing scheme through which it would pay employees to get there first.1
It is interesting to see the SFO aiming to press ahead with these plans despite being in a transitionary period under an interim Director (Graham McNulty). The SFO's previous Director, Nick Ephgrave, began his tenure with a clear statement that he wanted to introduce whistleblower incentives. He saw paying whistleblowers as having "many benefits" and forming one of "the building blocks for a much quicker and more efficient way of dealing with big cases".2
This revived an idea which last formally surfaced in 2013 (under a previous government's Serious and Organised Crime Strategy). In the interim, the Financial Conduct Authority investigated introducing financial incentives for whistleblowers but ultimately rejected the idea (apparently regarding the potential risks as too great).
After Ephgrave's speech in 2024, little more was heard for the next two years. The idea received a considerable boost in July of this year when it surfaced as one of the Recommendations of Jonathan Fisher KC's 'Fraud in the Digital Age' report. Fisher examined the history of the debate in the UK, looked at the position elsewhere (particularly the U.S.), set out the arguments on both sides, and reported on the results of a specially commissioned public poll which found 70% of participants supported financially rewarding whistleblowers of serious economic crime.3
The SFO may also have felt encouraged by the strengthening of HM Revenue and Customs' reward scheme at the end of 2025,4 and by the increase of the potential reward available under the Competition and Markets Authority's whistleblowing reward programme.5 In this context, the SFO's proposed scheme may be accepted more easily.
How much is enough?
The consultation on reforms to the UK's whistleblowing regime (which also tackles wider issues with the Employment Rights Act 1996) runs until early January 2027. The consultation document sets out a series of questions which illustrate how many important decisions will need to be made before the SFO's scheme could be launched.
One key point is what level of reward should be granted to a successful whistleblower. A careful balance will need to be found. The scheme will need to provide sufficient financial incentives to make the scheme effective, and to offset any worries which a potential whistleblower will naturally have about coming forward. The scheme will be unpopular if it reduces valuable Treasury income from penalties. Setting the potential reward too high could also encourage more speculative or vexatious reports, and feed into arguments that paying individuals who blow the whistle is unethical and may reduce the credibility of a key witness in the eyes of a jury.
Who could benefit?
The proposed SFO whistleblower incentivisation scheme would have its own set of rules governing, amongst other things, who could be eligible for a reward.
The consultation document sets out factors that could be considered here, including whether an individual was culpable in the relevant offending or obtained the information through dishonest means, and whether they could still get a payout if they originally made a report to another UK or overseas authority.
Legislative overkill?
The consultation also asks for input into whether new criminal offences should be created to support a new scheme. The options, brought through from the Fisher Report, include an offence of knowingly making a false report (aiming to deter abuse of the scheme) and another of "harassing or intimidating whistleblowers who report information under the SFO's scheme".
Care should be taken not to over legislate, as this could introduce delays in establishing the scheme whilst Parliament debates the legislation, as well as making administration of the scheme more complex. Existing legislation may well be adequate to police fraudulent reports and whistleblower intimidation.
Conclusion
The SFO has been under the spotlight recently as the Libor trader cases work through the courts, undoing what were regarded at the time as significant victories for the agency. The latest HMCPSI report found more work needed to be done by the SFO on disclosure and raised some real concerns about the way the SFO handles legally privileged material. The announcement of a whistleblower incentive scheme may therefore give the SFO a welcome boost.
Implementing a scheme which would effectively set employees against companies in a race to be the first to contact the SFO could alter the dynamics of corporate investigations. The self-reporting decision is already a very difficult one for companies.
On the same day the whistleblowing consultation was launched, the SFO offered companies some limited comfort in this regard as it updated its Cooperation Guidance. It added a note explaining for the first time in writing that a company's lawyers could speak with the agency (keeping the company's identity anonymous if preferred) to discuss a potential self-report.6
If a proposed SFO whistleblower incentivisation scheme is implemented, this will inevitably result in the agency receiving more reports. Even where these do not result in a formal investigation being opened, they will provide the SFO with valuable intelligence. The SFO's Interim Director, Graham McNulty, has stressed the SFO's aim to become a more proactive enforcer and spoken about the role of whistleblowers as a "vital source of information".
As the SFO's new strategy takes shape, with gradually increasing financial support from central government playing an important part, the exact shape of any whistleblower incentive scheme may prove to be a key to its success.7
1 https://www.gov.uk/government/consultations/whistleblowing
2 https://www.gov.uk/government/speeches/director-ephgraves-speech-at-rusi-13-february-2024
3 Page 137 of the report available at https://www.gov.uk/government/publications/fraud-in-the-digital-age
4 Under the Strengthened Reward Scheme an individual may receive an award of between 15% and 30% of the tax collected as a result of a verified report of tax evasion of at least £1.5 million
5 The potential reward was increased from £100,000 to £250,000 in 2023
6 https://www.gov.uk/government/publications/sfo-cooperation-guidance/sfo-corporate-guidance#how-to-self-report
7 https://www.gov.uk/government/speeches/director-addresses-global-anti-corruption-conference
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