ML Covered - March 2026

We are pleased to share our latest instalment of ML Covered, our monthly round-up of key events relevant to those dealing with Management Liability Policies covering D&O, EPL and PTL-type risks.

11-year disqualification for director over Covid-era support

In The Secretary of State for Business and Trade v Pal [2026] EWHC 262 (Ch), a director and shareholder was disqualified for 11 years and forced to repay Covid-era financial support, after breaching the conditions under which the support had been provided.

Background

Sehar Pal (the Defendant) was the sole shareholder and director of 7Speed Ltd (the Company), a company incorporated in May 2018. The Company’s stated business was the sale of used cars and motor parts.

Following the Covid pandemic, the Bounce Back Loan (BBL) Scheme was introduced in May 2020. It allowed loans of up to £50,000, or 25% of a company’s actual 2019 turnover, whichever was lower. Only companies established after 1 January 2019 could use estimated turnover. On 10 May 2020, the Defendant completed an online BBL application on behalf of the Company with Santander. The Defendant entered “2019 company turnover” of £220,000 on the application and requested £50,000. The application process stated that funds must be used wholly for business purposes and to provide economic benefit to the business.

The BBL agreement was signed on 11 May 2020 and £50,000 was paid into the Company’s account on 12 May 2020. Between 12 May and 18 June 2020, £49,997.50 was transferred out, with approximately half of this amount being transferred directly to the Defendant, with the rest being transferred to other companies and individuals.

No repayments were made by the Company when the loan became due from June 2021. The Company was dissolved on 27 July 2021 and Santander, under the government guarantee, was paid £50,843.21. Santander then made a complaint to the Insolvency Service, in respect of the BBL to the Company.

Decision

The court made a disqualification order against the Defendant for 11 years under section 6 of the Company Directors Disqualification Act 1986 (CDDA) and made a compensation order under section 15A of the CDDA for £50,000 plus interest at 2.5% from 21 June 2021, for the benefit of Santander.

It was found that the Company’s actual 2019 turnover was nil or close to zero, based on the dormant accounts and bank statements, and that the Defendant's declaration of £220,000 was knowingly false or at least reckless. The Defendant had understood the BBL rules and the significance of the turnover figure. The judge also found that £49,997 of the loan was used for purposes other than the Company's business and not for its economic benefit. The Judge noted that the Defendant's lack of supporting documentation was “conspicuous by its absence”. The Defendant's actions were held to be serious misconduct and falling below the ordinary standards of commercial morality, thereby demonstrating unfitness to act as a director.

Key takeaways

The number of enforcement actions taken by the Insolvency Service remain high, with many being a legacy of abuses of the Covid financial support scheme. The Government launched a voluntary repayment scheme from September 2025 to December 2025 for any improper claims made for financial support during the Covid pandemic. HMRC and other government bodies are now expected to intensify scrutiny and enforcement efforts across all Covid-related support schemes. All businesses and individuals should ensure they have adequate documentation to evidence that any financial support received was used in accordance with the conditions that the support was provided.

To read more, please click here.

Nonprofit organisations facing an increasing D&O risk exposure

According to recent reports, nonprofit organisations are facing rising D&O exposure. The D&O liability risk landscape for nonprofit organisations is increasingly resembling those currently faced by private and public companies.

Economic uncertainty, heightened regulatory scrutiny, and escalating employment and cyber claims are all contributing to the risks facing nonprofit boards and is reshaping nonprofit D&O risk.

Economic uncertainty (in particular, inflation, higher borrowing costs, and tighter public funding) is the dominant force behind the rising nonprofit D&O exposure. Nonprofits often rely heavily on a single revenue stream, such as donor contributions and government grants. The risk at board level can increase if these revenue streams dry up, and the increasing complexity of government funding, with differing compliance requirements for national and local requirements, is also adding to board-level risk. Mistakes in respect of fundraising compliance can quickly escalate into regulatory actions or reputational harm, both being common triggers for D&O claims.

There has also been a notable rise in employment practices liability (EPL) claims. This is often attributed to nonprofits having tight budgets, which can lead to limited staffing and therefore overworking. Unsurprisingly, cyber exposure is also emerging as a significant management liability risk for nonprofits, with many nonprofits lacking the resources to invest in adequate cyber protection or employee training, which increases their vulnerability.

Key takeaways

Directors and officers of nonprofits should ensure they stay on top of the emerging risks facing the nonprofit sector. Dedicated policies for key risk areas should be introduced in order to help mitigate those risks, as well as training for relevant employees.

To read more, please click here.

Disciplinary policies can be contractually binding: Dr MN v NHS Foundation Trust L

The Court of Appeal has confirmed that provisions in workplace disciplinary policies can have contractual effect and be legally enforceable where their wording and context justify it. The decision in Dr MN v NHS Foundation Trust L [2026] serves as a cautionary reminder to employers – particularly in the NHS and wider public sector – that they must follow their own procedures carefully.

Background

Dr MN is a consultant employed by an NHS Foundation Trust. The Trust commenced an internal investigation into his professional conduct after a parent of a child connected to the Lucy Letby alleged that he had breached patient confidentiality.

Under the Trust's disciplinary policy – which was aligned with the national framework of Maintaining High Professional Standards in the Modern NHS (MHPS), the Trust's Medical Director was stated to act as 'Case Manager' in any investigations that involved a consultant.

Despite this, the Trust appointed a different senior manager (Director of Corporate Affairs) to act as Case Manager. Dr MN argued that this breached his contract of employment and that the disciplinary formed part of his contractual terms.

High Court Decision

The High Court agreed with Dr MN and held that the Trust was in breach of contract. It found that:

• The relevant provision of the Trust's disciplinary policy was incorporated into Dr MN's contract.
• The policy imposed a binding obligation on the Medical Director to act as Case Manager on cases involving a consultant.
• Delegation of that role was not permitted, save in exceptional circumstances.

The court also awarded Dr MN his costs in full.

Appeal

The Trust appealed, arguing that:

• The provision in the policy was not contractually binding
• Even if it was incorporated into Dr MN's contract, that it did not impose any mandatory requirement that only the Medical Director could act as Case Manager; and
• Separately, the High Court had made an incorrect decision in relation to costs.

Court of Appeal Decision

The Court of Appeal dismissed the appeal and upheld the High Court's findings.

It confirmed that provisions in workplace disciplinary policies can have contractual effect, depending in their wording and context. It was held that:

• The clause was sufficiently, clear, precise, important and closely linked to the employment relationship that it was incorporated as a term.
• The language used in the policy mandated the Medical Director to act as Case Manager by use of the phrase 'will act', which showed there was no discretion in the matter. Separately, the policy specifically mentioned scenarios where delegation was possible, which did not apply here.
• Dr MN's breach of contract claim succeeded.
• There was no error in the High Court's decision in relation to costs.

Key Points

This decision has wider implications beyond the NHS. It highlights that:

• Policies can be contractual: Clear, specific and important provisions, particularly those closely tied to the employment relationship, may be incorporated into contracts.
• Language matters: Mandatory wording such as 'must' and 'will' is more likely to be treated as binding.
• Follow your own procedures: Where a policy prescribes a particular decision-maker, or sets out specific steps or exceptions, employers should adhere to those requirements. Departing from them may give rise to a breach of contract claim.
• Review and update policies: Employers should review disciplinary and other HR policies to ensure that the intended status (contractual or non-contractual) is clear, and that any scope for delegation or flexibility is expressly identified. 

Managing belief in the workplace: Mr F Ngole v Touchstone Leeds [2026] EAT 29

In 2022, Mr Ngole accepted a conditional job offer as a discharge mental health support worker with Touchstone Leeds, a charity providing mental health and wellbeing services to the LGBTQI+ community and to various faith groups. The offer was withdrawn following Touchstone's discovery of news articles citing Mr Ngole's negative comments on social media regarding homosexuality and same-sex marriage. Mr Ngole was subsequently invited to a second interview to discuss his views; however, Touchstone ultimately decided not to reinstate the offer on the basis that Mr Ngole's views did not align with their values.

Mr Ngole subsequently pursued Employment Tribunal (ET) claims for direct discrimination, harassment and indirect discrimination.

Decision

The ET upheld Mr Ngole’s claim for direct discrimination, finding that the reason for withdrawing the offer was materially influenced by his religious beliefs. Mr Ngole's claims for indirect discrimination and harassment were dismissed.

On appeal to the Employment Appeal Tribunal (EAT), it was held that the ET has erred in failing to determine whether Touchstone's actions were based on Mr Ngole's beliefs or on the manifestation of those beliefs, namely his social media posts.

If Mr Ngole’s offer was withdrawn because of his beliefs, this would likely amount to unlawful direct discrimination. However, if the offer was withdrawn because of Touchstone’s concerns about the impact of his publicly expressed views on vulnerable service users, should they discover the posts, Touchstone’s conduct could be justified as a proportionate response to its obligation to protect vulnerable service users. The EAT has redirected the case back to the ET for reconsideration of these points.

What this means for employers and insurers

Employers must take care when making decisions based on an employee’s or applicant’s expressed views, particularly where those views relate to protected beliefs such as religion. While employers are entitled to consider the wider impact of public statements, including those made on social media, they must distinguish between the holding of a protected belief and the manifestation of that belief in a professional context. Employers should avoid making assumptions about how an individual might behave without first discussing any concerns with them, and any action taken must be proportionate and in pursuit of a legitimate aim.

Pensions Commission to report back in 2027

The Pensions Minister, Torsten Bell, has confirmed that the Pensions Commission will report back to the government in early 2027 with ideas on how to fix the long-term retirement savings problem.

The Pensions Commission, which was revived last summer, is considering several key issues, including whether the current auto‑enrolment minimum contributions – 3% from employers and 5% from employees – should be increased. It is also examining options to narrow the gender pension gap and to encourage greater pension participation among self‑employed workers. Bell emphasised that the Commission operates independently and has a broad remit to examine any reforms it considers appropriate. The government, he noted, is committed to considering all of its recommendations. He highlighted the scale of the challenge, observing that, on current trends, those retiring in 2050 are likely to have lower retirement incomes than today’s retirees. He also noted that any reforms arising from this work are unlikely to have a material impact over the next five years. The focus is instead on securing pension adequacy for future generations. When asked whether the priority should be expanding pension coverage or improving adequacy, Bell indicated that both must be addressed, as they affect different groups in different ways.

Changes to the level of pension contributions will be relevant to employers and with that PTL insurers given the level of enforcement activity from the Pensions Regulator around failures by employers to meet their auto-enrolment obligations. 

Audit regulator proposes updated standards for ‘Third Way’ CDC pensions

The Financial Reporting Council (FRC) has launched a consultation on proposed revisions to the Technical Actuarial Standard 310 (TAS 310), the key standard governing actuarial work for collective defined contribution (CDC) pension schemes. The consultation is open for responses until 23 March.

The consultation follows recent government legislation enabling the development of multi-employer CDC arrangements, allowing different employers within broadly the same industry to participate in a single pension scheme. These 'third way' pensions are intended to sit between traditional defined benefit and individual defined contribution schemes, pooling risk collectively among members. The FRC has indicated that the expansion of CDC to multi-employer structures introduces new areas of actuarial work, particularly in supporting trustees and scheme sponsors to ensure fairness between participating employers. In this context, the FRC is seeking to ensure that TAS 310 keeps pace with the evolving legislative and market landscape.

Key elements of the proposed changes include:

• Strengthening consistency across actuarial calculations for CDC schemes; and
• Introducing explicit requirements around actuarial equivalence, so that the expected value of future benefits accruing to members is aligned with the expected value of contributions paid into the scheme.

The FRC’s executive director of regulatory standards, Mark Babington, emphasised that high-quality actuarial work is essential to maintaining confidence in the UK pensions system and that the updated standard is intended to support informed decision-making as CDC schemes scale to cover more employers and members.

CDC remains a relatively new feature of the UK pensions landscape. Royal Mail launched the first UK CDC scheme in October 2024, under a legislative framework introduced in 2021. In parallel, the Pensions Regulator has proposed a new code of practice to support multi-employer CDC schemes from 2026, setting out authorisation requirements, supervisory expectations and how its statutory powers will be used to oversee these new arrangements.

FRC issues guidance for actuaries to deal with Virgin Media issues

The FRC has also issued practical, non-prescriptive guidance to actuaries tasked with reviewing historic pension scheme alterations impacted by the decision in Virgin Media Ltd v NTL Pension Trustees II Ltd & Ors [2024] EWCA Civ 843.

The Virgin Media case raised the risk that historic rule changes to contracted-out schemes could be void if written actuarial confirmation under section 37 of the Pension Schemes Act 1993 could not be evidenced, even where confirmation would likely have been given at the time. Draft legislation in the Pension Schemes Bill seeks to address this by allowing “potentially remediable alterations” to be treated as valid, if specified actuarial confirmations are obtained under section 101.

The FRC’s guidance focuses on how actuaries should approach this retrospective exercise. Crucially, it confirms that actuaries are not required to be certain an alteration would have passed the reference scheme test. Instead, they must reach a “reasoned and justifiable” view based on a proportionate review of the information available.  The costs aspect of engaging actuaries may well be sought under PTL policies, and if an actuary refuses to agree to retrospectively confirm a change as s.37 compliant this could lead to overpayment and underpayments of benefits.

To read RPC's recent blog post on the FRC guidance, which explores the legislative background, the regulator's expectations and practical examples in much greater depth, click here.

If you have any queries or questions on this topic please do get in contact with a member of the team below, or your usual RPC contact.