Latest fortnightly round-up of insurance, legal and business developments with analysis and commentary from the insurance team at Pinsent Masons.
The main topics we're focusing on this week are:
LEGAL UPDATE: The Law Commission in England has published a draft Insurable Interest Bill which it hopes will modernise insurable interest laws. It updates a previous draft bill from 2016 taking into account responses from the consultation. If implemented, this Bill would repeal previous, outdated legislation and better reflect the needs of consumers to protect themselves and their families.
The FCA has proposed a series of measures designed to improve competition between investment platforms and to make it easier for investors and advisers to switch platforms. Investment management expert Tobin Ashby of Pinsent Masons said the study "covered a wide range of matters. After a long wait for the FCA's views on the workings of the investment platform market, there is good news in that the FCA has found that the market is mainly working well and that customer satisfaction is high. There are quite a lot of initiatives and potential measures in the detail of this paper, however, that firms should consider carefully ahead of the consultation deadline in September."
The FCA is seeking views on whether there is a need for a new customer 'duty of care' or 'fiduciary duty', or whether the existing rules already provide sufficient protections for consumers. It is also seeking views on a new right for consumers to seek private damages against firms which have breached the new duty or the regulatory principles set out in the FCA Handbook, particularly the requirement to 'treat customers fairly'. Contentious financial regulatory expert Jonathan Cavill of Pinsent Masons said that the introduction of a private right for damages for breaches of the principles would "seem to extend the options available to private persons in tandem with the existing rights they have under section 138D FSMA to sue for breach of statutory duty or FOS. However, at this stage, it is unclear how much this would really change things for private persons in cases where they would ordinarily go to the Financial Ombudsman Service, which happily relies on breaches of the FCA Principles to uphold complaints."
ANALYSIS: Financial services firms will not cut the gender pay gap (GPG) that exists in their organisation without tackling the "alpha male culture" that exists. That was the message from a committee of MPs last month, which found that the culture within the financial services sector acts as a barrier to the career progression of women and is reinforced by the raw data disclosed by the firms in the first tranche of GPG reporting earlier this year. Our analysis of that information has found that while positive steps are being taken in the financial services sector to close the GPG, a renewed effort is needed to address a culture that neither rewards performance of, nor encourages progression for, women.
ANALYSIS: Third party litigation funding is a growing industry in England and Wales, although the market remains largely unregulated. Litigation funding has provided investors with a new opportunity which allows them to hedge market risk, as investments into litigation finance do not tend to follow general market trends. Market participants include specialist litigation funders as well as major global financial institutions, demonstrating that this type of funding is seen as a lucrative emerging industry.
LEGAL UPDATE: London's main broking and underwriting communities collaborated to produce a framework that would handle low value, non-complex claims involving multiple insurers more quickly and cheaply. This Single Claims Agreement Party (SCAP) has been in operation since 1 February. SCAP means that one insurer takes the lead on claims management but the system contains protections for the other insurers, the followers, giving them access to information and to a process by which they can challenge the lead insurer's approach.
ANALYSIS: Conducting internal investigations in Germany requires thorough preparation and execution by experts to avoid pitfalls in connection with the lawyer-client privilege, as recent court rulings in the country highlight. The rulings should prompt general counsel of businesses with headquarters or operations in Germany to tighten up their approach to internal investigations. Failure to do so could result in sensitive information relevant to those investigations being seized by authorities and being used to initiate or back-up criminal or administrative enforcement action resulting in serious liabilities for the business, its managers and employees.
The average value of construction disputes and the time taken to resolve them increased again last year, reflecting the fact that disputes are becoming larger and more complex, according to a new report. Disputes tracked by Arcadis, the consultancy, were worth an average of $43.4 million last year, up from $32.5m in 2016; and took an average of 14.8 months to resolve, up from 13.9 months in 2016. The biggest increase in value was recorded in the Middle East, where the average dispute was valued at $91m last year, reflecting "the scale of the programs being delivered in the region", according to Arcadis.
Insurance briefing is a round-up of legal and business developments published on Out-Law.com.
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