Whistleblower Protection in Financial Institutions in Iceland: A Step Forward, but Room for Improvement?

Iceland has made significant strides in protecting whistleblowers in the financial sector with its consolidated legislation introduced in 2021. However, the country’s reputation was tarnished in the past decade due to declining Corruption Perception Index rankings and press freedom ratings.

Background

In recent years, Iceland has faced several high-profile scandals that have eroded public trust in the government and institutions. The Panama Papers scandal in 2016 led to the resignation of Prime Minister Sigmundur David Gunnlaugsson, while the Fishrot File investigation in 2019 revealed widespread corruption involving Icelandic fishing conglomerates and foreign officials.

Challenges

• Declining Corruption Perception Index rankings
• Press freedom ratings
• Lack of trust in administrative system
• Public’s trust is significantly lower than in other Nordic countries

Response to Challenges

In response to these challenges, a report commissioned by Prime Minister Katrín Jakobsdóttir in 2018 recommended strengthening whistleblower protections. The resulting Disclosure Protection Act, passed in 2019, provides robust safeguards for whistleblowers, including:

• Protection against liability and penalty
• Confidentiality
• Prohibition of retaliation by employers

Key Features

• Protects both public and private sector workers
• Consolidates whistleblower protections in one legislative instrument
• Broad definition of contemptible conduct

Limitations

While the Act provides robust safeguards for whistleblowers, some critics argue that it falls short of best practice standards:

• Lacking a reward scheme for whistleblowers
• No autonomous oversight body for disclosures

Comparison with Australia’s Whistleblower Protections

In comparison, Australia’s Treasury Laws Amendment (Enhancing Whistleblower Protections) Act, passed in 2019, has been praised for its more comprehensive approach:

• Broadened definition of wrongdoing that can be reported
• Removed the “good faith” requirement
• Extended protection to whistleblowers who report to prescribed bodies

Conclusion

While both Iceland and Australia have taken steps to strengthen whistleblower protections, there is still room for improvement. Iceland’s law could benefit from a reward scheme and an autonomous oversight body, while Australia’s Public Interest Disclosure Act 2013, which protects public sector workers, remains flawed.

Recommendations

• Implement a reward scheme for whistleblowers
• Establish an autonomous oversight body for disclosures
• Enhance the effectiveness of whistleblower protection laws in both countries

Audrey Quicke