British regulators have concluded that paying financial industry whistleblowers does not improve the quality of tips that come in, or ultimately enhance the integrity of markets.

In response to recommendations from a parliamentary committee studying possible reforms in the UK, the Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) agreed to study the idea of compensating whistleblowers. Today, they said that their research showed that “introducing financial incentives for whistleblowers would be unlikely to increase the number or quality of the disclosures we receive from them.”

They examined the use of payments by regulators in the U.S., and concluded that these incentives “only the small number whose information leads directly to successful enforcement action resulting in the imposition of fines. They provide nothing for the vast majority of whistleblowers.”

They also found that there is no empirical evidence that these incentives generate more, or better quality disclosures to the regulators. And, introducing incentives requires a complex, costly, governance structure.

The FCA and PRA also say they have other concerns about the impact of providing financial incentives to whistleblowers, including that this could lead to malicious reporting, entrapment, and conflicts of interest in court, among other issues. It also says that there could be public perception problems.

“In many cases rewards would need to be substantial, because a well-remunerated individual in the financial industry might expect their career prospects to be harmed by reporting other insiders and being associated with criminal acts. Handing over large sums, perhaps in the millions, would be a substantial shift in UK policy norms, which are very different to those in the U.S.,” they say. “Moreover, paying significant sums to high-income individuals for fulfilling a public duty could reinforce perceptions that the financial sector is at odds with the rest of society, particularly given the government’s decision not to introduce financial incentives for whistleblowers generally.”

Ultimately, they conclude that they will instead go ahead with other reforms designed to improve protection for, and transparency around, whistleblowing in the financial industry. Later this year both regulators will start publishing annual reports about the disclosures they receive and the action they take on them. They also intend to publish proposals on whistleblowing.

“Our aim will be to ensure that the culture in firms is one where people are prepared to speak up, as part of improving behaviour throughout the firm. We therefore want to avoid taking any action that could discourage firms from making these changes in a whole-hearted way,” they say.

In Canada, the Ontario Securities Commission (OSC) has said that it is considering the introduction of payments for whistleblowers. So far, it has yet to decide whether to proceed with that policy.