Record levels of fines for companies let down by their directors and officers

05 Apr 2022

Fines totalling nearly half a billion pounds were handed out to UK companies during 2021, highlighting the importance of appropriate Directors & Officers (D&O) insurance.  The findings, which are recorded by BLM’s D&O Tracker, include fines from four major UK regulators, including the Serious Fraud Office, Financial Conduct Authority and the Information Commissioner’s Office.

The D&O Tracker is free to access for insurers, brokers and corporates and also records compensation and legal costs orders, as well as the term of any custodial sentences against directors.

BLM’s D&O Tracker identifies the reasons for fines being handed down, breaking them into jurisdiction, sector and by company turnover. The data also shows a number of additional areas affecting D&Os, such as bribery, corruption and facilitation payments.

The largest fine, worth more than £264m, was handed to a banking group, which was convicted of failing to comply with money laundering obligations.  The case was the first occasion on which such criminal charges had been brought by the Financial Conduct Authority.

BLM Professional & Financial Risk Partner Alex Traill comments:

“Cases like this indicate how the regulators are increasingly looking to get tough against firms when their directors and officers are failing in their legal obligations.  Even when businesses are not complicit in the illegal activity taking place, they can be functionally vital to facilitating the illegal activity. It demonstrates the importance of having appropriate D&O insurance coverage to protect businesses and their senior personnel.”

The D&O tracker has also identified multiple violations of privacy rules.  The data shows how the Information Commissioner’s Office brought charges against firms that were calling, texting or emailing former customers without consent.  Some of the breaches were committed by smaller firms, resulting in fines of more than £50,000 each. 

Alex Traill continues:

“It’s not just the large corporations that can fall foul of the law.  SMEs racked up over £60m in D&O fines in 2021, compared to £120m over five years between 2016-2020. 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.”

D&O policies provide liability cover for company managers of all levels, which protects them from claims, reputational damage and legal costs following decisions and actions taken within the scope of their duties.

Since publishing the data, BLM has received media coverage in:

Insurance Day

Insurance Age

Continuity Insurance & Risk

Strategic Risk Europe

Insurance Edge

Commercial Risk Online

The data in this document has been aggregated from four leading regulators; Serious Fraud Office, Financial Conduct Authority, Information Commissioner’s Office and the Crown Prosecution Service, and primarily focuses on fines of £50,000 and above from 1 January 2016. BLM has taken all reasonable steps to ensure the information contained is correct but accepts no liability for the accuracy of the content. We will endeavour to update our Tracker on a quarterly basis. This data does not include decisions from the FOS (where fines are relatively low value), the Environment Agency (which applies to a limited number of sectors) and the Health & Safety Executive (our Health and Safety Sentencing Tracker includes details of HSE prosecutions).

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.

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Alexander Traill

Alexander Traill

Partner,
London


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