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02 October 2017 / article

Belgium introduces whistleblowing scheme for financial institutions

With the act of 31 July 2017, Belgium has introduced the first whistleblowing scheme in the private sector, in execution of the Market Abuse Regulation of 2014.

The provisions of the Act have entered into force on 1 September 2017. A Royal Decree of 24 September 2017 approves the procedural rules designed by the FSMA to receive whistleblowing reports. These rules will be applied as from 28 September 2017.

Which companies does the Act apply to?

Financial institutions subject to the provisions of article 45 of the Act of 2 August 2002 on the supervision of the financial sector and on financial services.

Which persons does the Act apply to? Any person (both employees and self-employed individuals) who reports an assumed or actual infringement by a financial institutions of the Act of 2 August 2002 to the FSMA.

What does the whistleblowing scheme entail?

Persons who report (assumed) infringements to the FSMA, enjoy the following protection:

  • The FSMA guarantees the confidentiality of their identity. Unless the whistleblower agrees to disclose his identity, the FSMA shall reject any request for information, explanation or communication on the whistleblowing.
  • The whistleblower may not be subjected to any civil, criminal or disciplinary claims or professional sanctions as a consequence of the reporting.
    The whistleblower is not considered to infringe on any non-disclosure of confidentiality obligations applying to him.
  • Any act of retaliation, discrimination or other form of disadvantageous treatment following a reporting is prohibited (e.g. termination of the employment contract or service agreement of the whistleblower).

With respect to any such disadvantageous treatment, the burden of proof is on the employer/principal, who will have to demonstrate that the measure is not related to the whistleblowing, if:

  • the measure is taken within 12 months after the reporting to the FSMA; and
    only if it may be reasonably assumed that the employer or principal was aware of or assumed
  • the reporting to the FSMA by the employee/contractor in question.

The whistleblower who is terminated or whose employment conditions have been changed unilaterally after the report, is entitled to request his reintegration under the old employment conditions. If the reintegration is refused, the whistleblower is entitled to a lump sum indemnity equal to six months of salary/fees, or the higher actual damage incurred.

The whistleblower is also protected against measures which are taken after the working relationship has ended (e.g. . defamation of the whistleblower towards a potential new employer). In such case the same sanction of the six-month indemnity applies.

What does the Act imply for you as a financial institution?

The Act forces financial institutions to introduce appropriate internal mechanisms to allow the reporting of infringements of their legal obligations. In other words, you will have to introduce some type of whistleblowing scheme in your organisation.

We will be happy to advise you on the implementation of a scheme that is compliant with data protection legislation and the guidelines of the Belgian Privacy Commission.

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