Whistleblowers are individuals within an organisation who sound the alarm to regulators or law enforcement about illegal or unethical practices within their organisation. They provide information that helps lead to regulatory enforcement action or Prosecution. In the UK, whistleblowers have legal protection from retaliation from their employer under Public Interest Disclosure Act 1998 (PIDA). In most cases however, they are unlikely to receive any financial reward for coming forward. Conversely, in the US, whistleblowers also enjoy legal protection but often receive huge multimillion dollar payouts too. 

The UK Competition and Markets Authority (CMA)  offers a maximum of £250,000 to whistleblowers. HMRC paid a total of £495,000 to whistleblowers in 2021/2022 . The UK Financial Conduct Authority does not even offer financial rewards to whistleblowers. In contrast, the US financial regulator, the Securities and Exchange Commission (SEC) for example, paid out $279 million to a single whistleblower earlier this year. While this was an unusually high and record-breaking payout, the SEC pays out millions of dollars to whistleblowers almost on a monthly basis. Overall, the US’s whistleblowing programme received more than 12,200 tips from over 100 countries in 2021.

These huge incentives arguably encourage employees to come forward with information on potentially illegal activity. This raises the question, is it time to improve payouts for whistleblowers to help crack down on crime? This article will explore the arguments for and against financial incentives for whistleblowers, with a focus on  financial services and financial crime.


There is a strong argument for increasing and introducing payouts to whistleblowers, particularly in financial services. The US’s whistleblowing programme is a success story and an example for other jurisdictions to follow. In the US, whistleblowers whose information lead to enforcement action can receive between 10-30% of an issued fine. This only applies where the fines issued are over $1 million. 

Financial incentives encourage more whistleblowers to come forward. SEC launched its whistleblowing programme in 2010. In 2022 alone, 86% of the $2.2 billion in civil settlements and judgments recovered by the DOJ regarding fraud and false claims against the US government were based upon whistleblower information. Whistleblowers are only rewarded if their unique and valuable “original information” results in a fraudster being found guilty and paying a sanction. This prevents false or spurious claims but still encourages whistleblowers to step forward. 

Stronger financial incentives can also improve the strength of cases brought forward. Due to the potential rewards, many top quality lawyers undertake whistleblower cases on a contingency basis and help whistleblowers build a strong case. This means regulators receive better prepared cases to work with and this can lead to more successful enforcement action. This ultimately leads to a healthier enforcement system where offenders are brought to justice.


There are some arguments against introducing or increasing financial incentives for whistleblowers. In its 2014 report, the FCA concluded that ‘there is as yet no empirical evidence of incentives leading to an increase in the number or quality of disclosures received by the regulators’. In the UK, the CMA offers financial incentives up to £250,000 to whistleblowers but still receives relatively few tips. The US ‘s programme however, is more comparable. Here, there is strong evidence to suggest the quantity of tips has in fact increased. But with fewer than 1% of tips leading to enforcement action, there remains limited evidence to suggest financial incentives result in better quality tips. In any case, fostering a culture where employees feel assured of their financial security if they come forward with information can only be positive.

The FCA’s argument against financial incentives for financial crime whistleblowers was based upon a cost benefit analysis. It considered the benefits too limited compared to the cost of implementation. Although whistleblowers receive a cut from fines, the cost and resources required to investigate tips from whistleblowers is huge. In the US, only 1 in 250 tips lead to awards. This means countless man hours are spent sifting through tips that don’t lead to any sanctions.

In the UK where public services have had budgets slashed, our regulators don’t have the capacity to deal with vast numbers of tips that are unlikely to result in sanctions. For example, fewer than 100 whistleblowing cases were reported to the Competition and Markets Authority between 2018 and 2023 (link). Only 58 of those led to further investigations. Even in the US, only 103 rewards were paid out to whistleblowers from over 12,000 whistleblowing disclosures to the SEC.

This shows that most tips are not strong enough to proceed with enforcement action. If the number of tips were to spike due to employees looking for a pay day, UK regulators would be inundated with investigations. Without significantly more recruitment and investment, UK regulatory bodies would not be equipped to deal with the potential scale of tips that could come in due to increased pay outs. While an increased number of tips is desirable, it is costly and time consuming. Without timely and efficient investigation of these tips, the whistleblowing framework would be undermined. 

The FCA also went on to argue that incentives undermine companies’ internal whistleblowing systems and ultimately this undermines culture within firms. This concern is valid as employees would be incentivised to report malpractice to the regulator, rather than seeking internal channels. That being said, it remains in firms’ interest to improve internal channels. Firms will prefer to resolve issues internally rather than through regulatory investigation. Therefore, there will always be incentive to improve internal whistleblowing systems.


Taking all into account, introducing stronger financial incentives for whistleblowers would be beneficial to the UK whistleblowing framework for financial crime. It must be noted, this will only be effective in fields where large fines are levied against offenders. In financial services, this is definitely the case. The largest FCA fine was £284 million and was issued in 2015 against Barclays. The regulator frequently levies fines in the tens of millions for legal and regulatory breaches. 

The US is a good example of a culture where individuals feel more comfortable coming forward with information. Some reform would be necessary to better equip the regulator to handle the likely increase in the number of requests.

Whistleblowers often end up blacklisted and unable to work again in their industry. It is a huge ask to get people to risk their livelihood solely from a moral compulsion to do the right thing. Doing the right should always be a driving factor for whistleblowers but for many, financial security is as important. Offering a financial safety net for whistleblowers would encourage more people to come forward with information. Ultimately, culture will be improved within financial services and this will help clean up financial crime.