Directors and Officers Liability will keep growing in 2018
In 2017, 36% of UK companies experienced a claim and/or investigation involving directors of their company, up from 21% in 2016.
In 2016 the Financial Conduct Authority investigated 152 individual directors, up from only 62 in 2015.
Over the past several years, UK legislation and regulations have greatly expanded the potential number of risks that directors and officers (D&Os) may have to handle. To protect your D&Os, guard against these five legislative and regulatory risks in 2018:
- Companies Act 2006—This outlines the duties and responsibilities of directors and officers. Most often, legal action is brought when directors and officers act outside their powers and do not promote the success of the company.
- Employment Law—Employees can file claims for unfair dismissal along with harassment and discrimination, with the latter having an uncapped fine limit.
- Modern Slavery Act—Organisations with a global turnover of at least £36 million are required to submit an annual statement that outlines the steps taken to ensure modern slavery is not taking place within their business and supply chains, which must be approved by the board and signed by a director.
- Criminal Finances Act—Directors of organisations that fail to prevent staff from facilitating tax evasion could be found liable for an employee’s actions.
- General Data Protection Regulation (GDPR) —Organisations that don’t comply with the GDPR could face fines up to €20 million or 4 per cent of the organisation’s worldwide annual turnover, whichever one is higher. Directors who fail to prioritise GDPR compliance could be held personally liable.
Directors’ and officers’ insurance, also known as Management Liability Policy, will provide cover against claims arising from a breach of trust and duty, neglect, error, misleading statements and wrongful trading or defending / settling health and safety, manslaughter or employment claims. Contact Lockyers to see how cover can be tailored to include protection for directors and the company against litigation, cover for the company in employment tribunals (including awards granted to the employee) and also for pension trustees liability.