MPs are calling for the creation of an independent office to protect whistleblowers after a report found existing UK laws are leaving staff who speak up exposed to abuse by their employers.

The paper, published by the all-party parliamentary group (APPG) on whistleblowing, detailed the serious personal and professional costs associated with calling out wrongdoing.

Evidence gathered from more than 300 whistleblowers found they often face false criticism by employers, gagging orders, pay cuts or job losses, ruined reputations, blacklisting across their sector and sometimes expensive legal disputes. This kind of retaliation also affected the mental health of respondents, with some trying to kill themselves.

Whistleblowing cases such as those that exposed money laundering at Danske Bank, the use of offshore tax havens as revealed by the Panama Papers and the harvesting of Facebook data by Cambridge Analytica prove “whistleblowers are the first line of defence against corruption, crime and cover-ups”, the report explained.

“Despite the undisputed benefits to society, there remains a backlash by organisations towards whistleblowing, resulting in stigmatisation and victimisation of whistleblowers,” it added.

Cross-party MPs are urging the government to establish an independent office that would set national standards for infrastructure and safeguards, enforce protection and issue meaningful penalties to organisations and individuals who breach its rules.

Their recommendations also include a ban on non-disclosure agreements, often referred to as “gagging orders” or confidentiality agreements, as a means to silence whistleblowers. MPs also want an urgent review of the legal aid available to whistleblowers and protection extended to all members of the public, as current laws only safeguard staff who speak up against their employers.

In the UK, the only legal protection currently granted is through the Public Interest Disclosure Act. While Pida was the first of its kind in the EU when it was launched in 1998, the APPG’s report said it has crucially failed to protect those who speak up and requires a “radical overhaul”.

Some sectors, including financial services and the NHS, have adopted their own set of regulations, but they attracted significant criticism by whistleblowers surveyed for the MPs’ report.

Some believe the City’s watchdog, the Financial Conduct Authority, is only paying lip service to whistleblower support, lacks transparency over its process and fails to protect the anonymity of those who speak out. At least one whistleblower praised the NHS Freedom to Speak Up programme, though others said there was a lack of support and claimed its guardians were primarily human resources staff interested in a stepping stone for their careers.

“The main problem is that these arrangements might look good on paper but can be ineffective or insufficient in practice. Some of the respondents to our call for evidence referred to this as ‘window dressing’ and ‘a charade’,” the report said.

A spokesman for the FCA, which handled 1,119 whistleblowing reports last year, said: “We consider every whistleblowing report fully, assessing the evidence thoroughly to determine whether there is a case for us to take action. We have robust policies and practices in place to maintain whistleblower confidentiality, track whistleblowing intelligence properly, and share it across the FCA.”

Henrietta Hughes, a national guardian for the NHS, said the speak up programme has fielded 19,000 cases over the past two years, and saved patient’s lives. “I can already see the difference this is making in the NHS, but I call on leaders to join me in taking further actions to make speaking up business as usual.”

The APPG’s paper is the first of three its members plan to publish, and the next report will survey regulators, government departments and trade unions. The final paper will take into account views by MPs, lords, the judiciary and journalists.

“We can estimate, based on the evidence provided by whistleblowers, that the annual cost exceeds many millions every year and presents a substantial cost to the life and security of our citizens,” the report concluded.

“Every whistleblower headline exposes another failure of existing legislation, and as we look to the future, we must ensure that the UK is a secure and ethical place to do business and to work.”