Insurance briefing is a round-up of legal and business developments published on Out-Law.com.
Welcome to Insurance Briefing - a fortnightly round-up of insurance legal and business developments with analysis and commentary from the insurance team at Pinsent Masons.
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The topics we're focusing on this week include:
Insurer diversity rules take effect in the UK
Major insurers in the UK must "consider a broad set of qualities and competencies" when recruiting board members, and have a policy in place to promote board diversity, under new rules that came into effect on 9 April. The Prudential Regulation Authority (PRA) said insurers are "best placed to determine themselves the details of their policy to promote diversity" because "the areas requiring greater representation will differ across firms, and because the needs of firms will also vary". It could be "counterproductive" to detail a prescriptive approach to diversity when "organisations are still experimenting with new approaches", it said. Financial services employment law expert Jon Fisher of Pinsent Masons said: "Regulators are increasingly focusing on diversity as a key means of controlling risks. The PRA's guidance follows the FCA's recent discussion paper on the importance of diversity in driving cultural change. The recent publicity surrounding the first year of gender pay gap reporting has also highlighted why firms should be looking at ways of improving the diversity of their senior management teams. The gender pay gap in financial services exceeds the national average, and the only effective means to address that will be to improve the representation of women in senior roles."
Gender pay gap reporting has 'explosive' but positive effect
ANALYSIS: Gender pay gap (GPG) reporting in the UK has had an explosive effect in terms of shining a spotlight on the issue of female participation and progression in the workplace and holding companies to account. Put simply, the rules are a game changer. The first deadline under the GPG reporting regulations passed on 4 April. Of the 10,000 + employers who published their data - over 1000 of them in the final 24 hours before the deadline - more than three quarters pay men on average more than women. There are also stark differences in gender pay across sectors. More details of our analysis are set out below. The GPG regime has also helped to highlight a number of broader issues, from the way organisations are structured to deep-rooted societal issues, including how to encourage more women to study STEM subjects and to pursue careers in more male dominated professions, how to facilitate better access to childcare and flexible working opportunities, and the need for greater shared parental responsibility.While GPG reporting has generated considerable media attention in the build up to the first reporting deadline and that deadline has now passed, we can expect employers to come in for even greater scrutiny when they publish their data for 2018.
FCA puts Brexit and consumer protection on the priority list
The Financial Conduct Authority (FCA) has released its business
plan for 2018/19, focusing heavily on the resources needed to deal
with the UK's withdrawal from the EU. According to the plan (62
page / 3.9MB PDF), Brexit is a key priority for the regulator as it
seeks to ensure an appropriate transition to the new regulatory
environment after the UK's withdrawal next March. The FCA's
work will include working with regulated firms and monitoring the
risks Brexit poses to its objectives, ensuring it is operationally
ready for withdrawal, and cooperating with its international
partners. The business plan outlined seven cross-sector priorities,
and seven sector-specific priorities.
The cross-sector priorities include firms' culture and
governance, tackling financial crime, looking at data security and
resilience, focusing on innovation, the treatment of existing
customers, long-term savings such as pensions, and high-cost
credit. Many of these areas are already a focus for the regulator.
Sector priorities listed in the business plan cover financial
markets, investment management, retail lending, pensions, retail
investment, retail banking and general insurance.
PCP mis-selling findings remain a risk in light of FCA report
ANALYSIS: There remains a risk that car dealerships and finance
companies will be caught up in a mis-selling scandal around the
sale of 'personal contract purchases' (PCPs) to vehicle
buyers following the publication of a report by the UK's
Financial Conduct Authority (FCA). The FCA is conducting a review
of the motor finance market after it previously raised concerns
about transparency, potential conflicts of interest and
irresponsible lending.
PCPs have seen huge growth in popularity among consumers exploring
financing options for paying for vehicles and are within the scope
of the regulator's review. However, there has been some concern
in the market about the sale and structure of PCP contracts,
particularly in terms of customer transparency and understanding of
the contracts and lenders' prudential exposure to them.
Online claims service being piloted in England and Wales
A new online claims system is being piloted in England and Wales. The system allows claims of up to £10,000 to be raised by anyone in England and Wales and provides for online dispute resolution and mediation, the HM Courts & Tribunals Service (HMCTS) said. UK justice minister Lucy Fraser said: "We know that using the civil courts has been a daunting prospect for some. This innovative, quick and easy online system will enable people and small businesses to get back the money that is rightly owed to them. This is an excellent example of the work we are doing under our £1billion plan to transform the courts system, allowing people to access justice online and around their busy lives."
GDPR: UK watchdog promises 'proportionate and pragmatic' enforcement
The UK's information commissioner has promised to use new powers to issue "hefty fines" for breaches of data protection law sparingly. From 25 May, Elizabeth Denham will have the power to issue fines of up to 4% of a business' annual global turnover, or €20 million, whichever is highest, where they are responsible for certain breaches of the new General Data Protection Regulation (GDPR). Other types of breaches could attract fines of up to 2% of annual global turnover, or €10m. However, on Monday, Denham said she plans to stick with the Information Commissioner's Office's (ICO's) existing approach to enforcement when the GDPR begins to apply. She described enforcement as "a last resort". "I have no intention of changing the ICO's proportionate and pragmatic approach after 25 May," Denham said in a speech at the ICO's annual data protection practitioners conference. "Hefty fines will be reserved for those organisations that persistently, deliberately or negligently flout the law."
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