FAAA pushes for stronger whistleblower protections for professional associations

The Financial Advice Association of Australia (FAAA) has made four key recommendations for improving whistleblower protections in response to Treasury’s review of tax and corporate whistleblowing in Australia.

The review into whistleblower protections follows the investigation into misconduct allegations made against KPMG, which were raised by a whistleblower and aired in Parliament earlier this year.

The big four firm has come under scrutiny for its treatment of the whistleblower and the firm’s failure to adequately investigate their allegations. Most recently, KPMG has disclosed newly uncovered evidence to regulators, which substantiated one of the whistleblower’s allegations about the improper handling and sharing of confidential information after the allegation was previously denied.

The fallout from the KPMG misconduct allegations has intensified calls by associations such as FAAA for stronger whistleblower protections and reporting mechanisms to ensure misconduct within professional services firms is identified and reported.

One of the key recommendations in FAAA’s submission is for corporate and tax whistleblower regimes to recognise the role of AUSTRAC and make clear how the AML/CTF regime interacts with the whistleblowing requirements and protections.

This follows the start of tranche two of Australia’s expanded AML/CTF regime, now in effect, which requires accountants to identify and report potential financial crime by conducting enhanced client due diligence, reinforcing their role as a key defence against money laundering and terrorist financing despite increased compliance costs.

The association pointed out that current legislative frameworks lack transparency regarding the intersection of whistleblowing protections and AML/CTF suspicious matter reporting (SMR) duties, requesting further explanation on how these regimes function in tandem.

FAAA noted that there were also potential inconsistencies in the investigation requirements between the AML/CTF Act and the whistleblowing regimes.

Under the AML/CTF regime, once a reporting entity has formed reasonable grounds for suspicion, it must report the matter within the set timeframes and monitor the behaviour and transactions of the customer.

FAAA also called for whistleblower protections for individuals and entities who disclose information in good faith to professional bodies.

It highlighted that the omission of professional bodies from existing legislative frameworks establishes a significant gap, potentially leaving those who disclose misconduct without legal coverage and vulnerable to adverse consequences.

Financial services professionals, including advisers and support staff, may operate under the assumption that reporting suspected wrongdoing to their respective professional bodies would afford them coverage under existing whistleblower protection frameworks.

As professional bodies are not included in the whistleblowing regimes, FAAA raised concerns that disclosing information about a whistleblower to ASIC could essentially put the association at risk of breaching the whistleblowing laws and consequently incurring a penalty.

FAAA also called for bodies that receive information from whistleblowers in good faith and pass the information onto a relevant legal authority or government agency to be afforded third-party whistleblower protection.

The other recommendation from FAAA was for the government to permit regulators and government agencies to share information with TPB recognised professional bodies and ASIC prescribed associations.

FAAA’s general manager of policy, advocacy and standards, Phil Anderson, said the submission addresses key concerns with the current whistleblower regime, including “potential conflict with AML/CTF laws and the need to recognise professional associations in the context of whistleblowing.”

“We support whistleblowing as a way of identifying misconduct and helping to address problems early to avoid consumer loss,” Anderson said.