Directors & Officers – Record Company Fines in 2021
In 2021, companies had to pay out a record amount of money in Director and Officer fines.
Costly is the head that wears the crown…
This year, companies have had to pay out more for the failure of their senior leaders than ever before.
According to law firm BLM, fines of almost £500m were handed out to UK companies over the course of 2021.
According to the insurance and dispute resolution legal firm, these figures spell out just how imperative it is for directors and officers to be adequately insured.
The £500m figures include fines from four major UK regulators, including the Serious Fraud Office, Financial Conduct Authority and the Information Commissioner’s Office.
The biggest fine was for an incredible £264m, which was handed out to a banking group as a result of failing to comply with money laundering obligations and legislation. This case was also the first occasion on which criminal charges of that type had been brought by the Financial Conduct Authority.
Plan Insurance can accommodate your Directors & Officers insurance needs. Just fill in our short call back form, and our professional brokers will be in contact to arrange your policy.
The regulators are putting their foot down
Experts believe major cases like the one highlighted above are a sign that regulators are starting to flex their muscles in the most powerful way they can, by costing companies serious money. BLM partner Alex Traill commentated that regulators are increasingly becoming tougher on firms when directors and officers are failing to hold up their obligations.
It’s certainly not healthy for the business’s bank balances, but many will be happy that business leaders are being held accountable for their behaviour.
Even if directors and officers aren’t complicit in illegal or immoral activity, they can play a role in facilitating poor, negligent and/or unethical behaviour in the company.
That isn’t to say blame always lays at business leaders’ feet. D&O insurance is essential to protect businesses and their senior personnel.
It isn’t just big companies that are falling foul of the rules
Small and medium-sized companies racked up over £60m in D&O fines in 2021, compared to £120m over five years between 2016-2020. One reason for this could be the directors’ responsibility over the safekeeping of customer information, and today firms have more customer data available than ever before.
Alex Trailer of BLM says, “The safeguarding of customer data is the responsibility of company directors and officers, and when that data is misused, directors can face fines or even custodial sentences. Being properly insured is now more important than ever.”
Privacy is a very 2022 issue
Insurance Age reported in February that the Information Commissioner’s Office had fined specialist motor broker Tempcover £85,000 for sending approximately 30m unsolicited text messages and emails over a period of around a year.
As well as that, the ICO has fined five major companies a collective £405,000 for making over 755,000 unsolicited marketing calls.
What you should do…
D&O policies provide liability cover for company managers of all levels, protecting them from claims, reputational damage and legal costs following decisions and actions taken within the scope of their duties. Not having the proper insurance cover in place has proven to be a costly mistake for many.
Most directors and officers are completely unaware of the need for cover, or (even worse) they think they’ll never need it.
Claims can arise from numerous sources: employees, customers, shareholders and elsewhere. Regardless of the size of your company, the cost of a legal defence could be significant.
Directors & Officers Insurance could provide comprehensive protection, tailored to meet the needs of your organisation.
You’ll benefit from…
Competitive premiums from leading insurersCover tailored to your exact requirementsAward-winning customer service and specialist advice
