UK proposes rewards for whistleblowers who report economic crime

LONDON, Oct 12 (Reuters) - Britain's Serious Fraud Office is developing plans to reward whistleblowers who report economic crimes such as fraud and bribery, the government said on Monday.

The move would bring Britain closer to the US model, where financial incentives are used to encourage whistleblowers to provide evidence that can help uncover wrongdoing.

Britain has long debated whether to pay whistleblowers for information. Last year, the tax authority HM Revenue & Customs introduced the country's first US-style reward scheme, offering informants up to 30% of tax recovered in major tax cases.

The change in approach has been driven by the success of overseas schemes, especially the US Securities and Exchange Commission (SEC) whistleblowing scheme. UK nationals are the second largest overseas user group of the SEC scheme, the government said. 

Under proposals set out for public consultation, whistleblowers would be eligible for a reward only if they provide significant, original information that leads to a conviction or other enforcement action. 

Mirroring the US approach, the government has proposed that rewards be funded from penalties imposed on companies and calculated as a percentage of the amount recovered.

"We welcome this consultation, having long called for the introduction of a scheme to incentivise whistleblowers. We encourage all those with a view to contribute to the consultation and we look forward to working with our government partners on next steps," a spokesperson for the SFO said.

The change was recommended in a July 2026 review of fraud prosecutions led by Jonathan Fisher KC, who said Britain was losing valuable intelligence as whistleblowers chose to report wrongdoing to US authorities, where they could be financially rewarded.

Former SFO Director Nick Ephgrave said in 2024 that paying corporate insiders to provide "smoking gun evidence" could significantly increase the speed of investigations. 

However, critics argue that offering financial rewards could encourage reports motivated by personal gain rather than the public interest.

Jo Mackie, an employment partner at law firm Michelmores, said such incentives created a "moral hazard" and risked undermining internal corporate governance, adding that paying whistleblowers was "fundamentally flawed".

(Reporting by Phoebe Seers, Editing by Iain Withers, Alexandra Hudson)