ML Covered - October 2025

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.

Court upholds rule that disclosure overrides prosecution fears

The High Court recently ruled in Aabar Holdings S.A.R.L & Others v (1) Glencore PLC and (2) Mr Ivan Glasenberg & Others[2025] EWHC 2243 (KB) that the First Defendant, Glencore, must disclose documents relating to a bribery investigation, as part of a claim by shareholders, despite Glencore's contention that disclosure risked prosecution overseas.

Background

In 2022, Glencore (a global natural resources company) pleaded guilty to bribery charges over its operations in several African countries. Proceedings, filed on behalf of shareholders a year later, alleged that senior staff knew about misconduct in the Glencore group and made untrue statements in past share prospectuses to cover up corrupt activities.

Glencore and its former Chief Executive Officer, Ivan Glasenberg (being the Second Defendant), attempted to block Glencore's shareholders from having access to documents linked to a Dutch criminal investigation in their claim, which accused the company of failing to disclose that it had arranged a worldwide bribery and corruption scheme relating to oil trading and related activities.

Decision

The High Court ruled that Glencore must disclose the documents obtained from the Dutch investigation.

The Court used the balancing exercise set out in Bank Mellat v HM Treasury [2019], where it was decided that Bank Mellat must produce unredacted documents, despite claims that doing so would breach Iranian law and risk prosecution in the country. Since then, in deciding such cases, courts have considered whether compliance with an English disclosure order could breach foreign criminal laws. They have also considered whether there is a risk of prosecution abroad and whether that risk of prosecution outweighs the importance of the documents to fair English proceedings.

Looking at the documents that were generated by the Dutch investigation, the Court concluded that they did not mention that there would be any risk of committing a criminal offence and/or that criminal proceedings would be brought if these were disclosed. The Court also noted that it was unimpressed with the inconsistencies in Glencore's position, noting that its two expert reports appeared "lawyered" and/or attempted to increase the perception of a risk of a prosecution.

Key takeaways

The decision illustrates the difficulties companies and directors face when trying to resist disclosure in civil proceedings by pointing to the risk of prosecution overseas. This decision follows similar decisions against companies such as Standard Chartered and EuroChem.

To read the case, please click here.

Covid voluntary repayment scheme launched

On 12 September 2025, the Government launched a time-limited Covid repayment window, allowing individuals and businesses to voluntarily repay financial support received during the Covid-19 pandemic, without consequence. The initiative forms part of the Government's broader efforts to recover over £10bn lost to Covid-related fraud.

The repayment window closes in December 2025. After that date, those businesses and individuals found to have made improper claims may face civil or criminal investigations, recovery actions, director disqualification and/or potential personal liability for directors. Beyond the legal implications, there is also a significant risk of reputational harm, particularly if enforcement actions become public.

Who can use the voluntary repayment scheme?

The scheme can be used by anyone who received financial support during the pandemic, including through the Coronavirus Job Retention Scheme, Bounce Back Loan Scheme, Self-Employment Income Support Scheme, Coronavirus Business Interruption Loan Scheme or sector-specific funding. It is particularly relevant for individuals or businesses that may have misunderstood the eligibility criteria at the time, or who now believe that some of the support was wrongly claimed or retained. Company directors should also take note, especially where support was accessed on behalf of their business.

Key Takeaways

This window offers an opportunity to proactively manage and reduce the risk in relation to Covid-19 financial support that was wrongfully claimed. From 2026 onwards, HMRC and other Government bodies are expected to intensify scrutiny and enforcement efforts across all Covid-related support schemes.

In terms of next steps, all businesses and individuals are encouraged to review all Covid-related support received across all schemes. Eligibility criteria should also be revisited to assess whether historic claims were made in accordance with the relevant criteria. Should any claims be identified as having not been valid, D&Os should attempt to quantify any potential exposure and seek legal and tax advice.

To read the case, please click here.

Employment Rights Bill update

In this month's edition, we highlight developments regarding the Employment Rights Bill (ERB).

Between 14 and 23 July 2025, the ERB passed through the House of Lords’ Report Stage, where a series of non-Government amendments were introduced, including significant changes to the Labour Government’s manifesto pledges. When the Bill returned to the House of Commons on 15 September, MPs rejected all but the straightforward technical changes and those proposed by the Government.

Key outcomes from the Commons

Day-one protection upheld

The House of Commons rejected the Lords’ proposal to introduce a six-month qualifying period for unfair dismissal claims. The reason given was that it is appropriate for this protection to apply from the start of employment. The Bill is now expected to proceed on the basis of day-one protections – a major shift from the current two-year qualifying period.

Duty to offer guaranteed hours contracts retained

The Commons overturned the Lords’ proposal to replace the duty to offer a guaranteed hours contract with a right for zero-hours workers to request one. Their reason was that it is appropriate for qualifying workers to be offered such contracts automatically. As it stands, the provision is likely to retain its original design, requiring employers to proactively offer guaranteed hours contracts to zero and low-hours workers (including agency workers).

"Short notice" definition to be determined

The Lords proposed defining “short notice” as 48 hours for the purpose of requiring employers to pay compensation when workers’ shifts are cancelled at short notice. The Commons rejected this proposal on the grounds that prescribing a fixed period at this stage would pre-empt consultation and limit the Government’s discretion. Instead, the definition of “short notice” will be set out in regulations following consultation.

Right to be accompanied unchanged

The Lords proposed broadening the right for employees to be accompanied at disciplinary or grievance hearings to include a “certified professional companion”. The Commons rejected this amendment because it would likely increase the cost, complexity, and length of these hearings. The Bill is expected to keep the right to be accompanied limited to a trade union representative or a colleague.

50% turnout threshold set to be removed

The Commons refused to adopt the Lords’ proposal to keep the 50% turnout threshold for industrial action ballots, taking the position that it is appropriate to remove it. The ERB is now set to abolish the 50% turnout threshold.

No further changes to whistleblowing regime

The Lords proposed requiring employers to take “reasonable steps” to investigate protected disclosures and to extend the circumstances in which an employee is considered unfairly dismissed after making a protected disclosure. The Commons found these proposals inappropriate. No changes are likely to be made to the current whistleblowing framework.

"No ifs, no buts"

The Commons' opposition to the amendments reaffirms the Government's commitment to keep the Bill largely intact. Nonetheless, doubts about the future of the ERB still remain following the resignation of Angela Rayner, the former Deputy Prime Minister and a key champion of the legislation. Her departure was accompanied by a ministerial reshuffle that removed Justin Madders, one of the Bill’s main architects, from his role and redeployed Jonathan Reynolds, another supporter of the Bill.

These cabinet changes prompted strong reactions from stakeholders. Unions voiced concern that the dismissal of the entire ERB team reflected Government capitulation to employer pressure, while business groups took the reshuffle as their last hope that the new ministerial team would take a more business-friendly approach. However, Starmer reassured MPs that the legislation would proceed “with the same substance and timetable as before”, while Education Secretary Phillipson, a potential successor to Rayner, pledged: “No ifs, no buts", "forward with the Employment Rights Bill in full".

What’s next?

The Bill will now return to the House of Lords for consideration of the Government’s reasons for rejecting their amendments. Royal Assent will only be granted once both Houses reach agreement, which means there is a possibility of delay. Even so, parliamentary precedent suggests that the Commons’ position is likely to be upheld, and the Bill remains on track to become law.

That said, much of the ERB’s detail has been left to secondary legislation. The recent Cabinet reshuffle may indeed be an indication that the Government will be open to considering employer concerns more closely at a later stage. While the core of the ERB is unlikely to change, there may still be opportunities to refine how its provisions are implemented following further consultation.

Takeaways for insurers

Assumptions and precedents, however, offer little certainty to insurers. The legislative tug-of-war, deep stakeholder divide, and cabinet reshuffle make precise risk assessments increasingly difficult, complicating coverage pricing, product positioning, and communication with brokers and policyholders about future coverage needs. Insurers are being forced to make strategic decisions about whether to price defensively or risk being caught off-guard.

What remains almost certain is that there will be no major retreat by Parliament at this stage. Many policyholders are likely to be unprepared to comply with the new obligations immediately, with 92% of small businesses expressing concerns about the ERB, according to the Federation of Small Businesses. An increase in claim volume is practically inevitable, particularly with measures such as day-one unfair dismissal protection exposing employers to risk two years earlier than before and the duty to offer guaranteed hours contracts significantly affecting policyholders with large seasonal workforces, especially in the retail and hospitality sectors. Insurers that can adapt quickly once implementation details emerge will be best positioned to capitalise on what promises to be a fundamentally transformed employment liability landscape.

Government proposes fix to Virgin Media pensions fallout

In July 2024, the Virgin Media Ltd v NTL Pension Trustees ruling threw contracted out defined benefit (DB) pension schemes into uncertainty, and the Government has now proposed a legislative fix. On 1 September, Pensions Minister Torsten Bell tabled amendments to the Pension Schemes Bill aimed at resolving the so-called “Virgin Media issue.”

The Virgin Media decision raised concerns that historic changes to contracted-out benefits, some made decades ago, could be invalid if they lacked formal actuarial certification. This left many schemes in limbo, facing the possibility of significant additional liabilities if those changes were deemed void.

The Government’s proposal allows trustees to retrospectively validate “potentially remediable alterations”, so long as key conditions are met. If trustees can obtain written confirmation from their actuary that an amendment would not have caused the scheme to fail the reference scheme test, assuming it had been validly made, the alteration will be treated as valid, with no need to dig through incomplete historical data.

While this is welcome relief for many schemes, there are limitations. Amendments that are already the subject of legal proceedings before 5 June 2025, or where trustees have taken “positive action” to treat them as void, are excluded from the draft legislation as it stands.

To read RPC's recent article on this topic, please click here.

TPO clarifies trustee duties for pre-2021 statutory transfers

The Pensions Ombudsman (TPO) has published a determination (CAS-81940-Z2S8) addressing trustee duties in relation to statutory transfers from occupational pension schemes before the 2021 transfer regulations came into force.

The case involved a member who transferred from the British Steel Pension Scheme to a small self-administered scheme in 2014. Years later, the member claimed that the trustee failed to carry out sufficient due diligence to identify potential scam risks, resulting in a loss of retirement benefits. However, TPO did not uphold the complaint.

TPO concluded that, at the time of the transfer, trustees had no legal obligation, whether by statute, regulation, common law or equity, to carry out additional due diligence beyond what was required under the Pensions Schemes Act 1993 (PSA 1993). Specifically, trustees were not required to follow guidance such as the Pensions Regulator’s 2013 “Action Pack” or the “Scorpion Leaflet,” and in this case, the trustee had not assumed any responsibility that could give rise to a higher duty of care.

This determination confirms TPO’s position that for statutory transfers made between February 2013 and November 2021, trustees’ duties were limited to meeting the legislative criteria under PSA 1993. It also sets a clear legal framework that will guide TPO’s approach to similar complaints in the future.

Further TPO decisions are expected, covering transfers from personal pension schemes (regulated by the FCA and possibly within the Financial Ombudsman Service’s jurisdiction) and discretionary or non-statutory transfers. Trustees and administrators should monitor these closely, but for now, the ruling provides much-needed clarity on historic transfer obligations.

To read TPO's press release, please click here.

TPR urges pension schemes to tighten security amid rise in impersonation fraud

The Pensions Regulator (TPR) has issued a warning to pension schemes following a rise in impersonation fraud, urging trustees and administrators to "act now" to protect members.

In particular, TPR found that fraudsters are hacking email accounts, intercepting correspondence, and impersonating scheme members to access or redirect pension funds. Some are even using stolen data to set up fake pension accounts, exploiting weak or unsecured login credentials.

TPR’s analysis, which was conducted via its Pension Scams Action Group (PSAG), revealed that 55% of reported victims were aged between 50 and 69. In a blog post, PSAG’s business lead, Paul Sweeney, stressed the urgent need for schemes to strengthen account security, report suspicious activity, and raise member awareness.

Fraudsters are also impersonating trusted brands, including the FCA and the Fraud Compensation Fund. PSAG has already helped take down over 30 high-risk scam sites and is working with City of London Police to issue alerts across the industry. Sweeney stressed that “schemes must tighten security and take action now” and that "every report counts”.

TPR 2025 DB Funding Report shows stronger scheme positions and shorter recovery plans

TPR has published its 2025 annual funding analysis of UK DB and hybrid pension schemes, showing significant improvements in funding levels and shorter recovery plans across the sector. The report covers tranche 18 valuations with effective dates between September 2022 and September 2023, based on data from 1,640 schemes. These valuations pre-date the new DB funding regulations, which take effect from 22 September 2024.

Key findings show that 62% of schemes reported a surplus, more than double the 27% seen in tranche 15. The average funding ratio (assets to liabilities) rose from 89% to 104%, indicating healthier scheme finances across all sizes. Recovery plans have also shortened considerably – only 38% of schemes in this cycle needed to submit a recovery plan, compared to 73% in the previous cycle. Among schemes still in deficit, the average recovery plan length fell from 6.3 to 4.4 years. Notably, 86% of schemes with deficits in both cycles shortened their plans, with over half bringing forward their end dates by more than three years. The median recovery plan end date is now 2027.

Overall, the report reflects stronger funding positions and accelerated journeys to full funding for many DB schemes – this leaves many schemes in a position to look to buy-out or whether to "run on" their investments whilst in a strong funding position – and this in turn means a new risk for PTL insurers to factor in.

To read the report, please click here.

TPR proposes smarter, risk-based enforcement strategy

On 16 September 2025, TPR launched a consultation proposing a refreshed enforcement strategy designed to make its regulatory approach more targeted, strategic and outcomes-focused. While the consultation doesn’t seek to amend TPR’s existing powers, it outlines key changes to how those powers may be used in future.

TPR currently holds wide-ranging enforcement powers which span regulatory notices, financial penalties, criminal prosecution, and civil litigation. Under the proposed strategy, the focus would shift to earlier, risk-based interventions aimed at preventing harm before it escalates, with a greater emphasis on protecting saver outcomes and building public trust.

Key themes include prioritising the most serious threats to savers and the pensions system, enhancing collaboration across teams and with external stakeholders, and using data analytics to drive smarter decision-making. Transparency is also a priority, with TPR promising clearer communication and publication of enforcement outcomes.

While the proposals have been criticised as somewhat vague and lacking alignment with the Pension Schemes Bill, they signal a move towards a more prudential and proactive regulatory approach. The consultation is open until 11 November 2025, with a final enforcement strategy expected in early 2026. Industry stakeholders, particularly PTL insurers, should pay close attention as this strategy evolves given the risk to increased enforcement activity.

To read RPC's recent article on this topic, please click here.

False scam flags causing unnecessary pension transfer delays

Thousands of pension transfers are being delayed unnecessarily due to the overuse of scam warning flags, according to new analysis from XPS Group and PensionBee.

Data from XPS shows that 94% of pension transfers reviewed raised at least one red or amber flag under the Conditions for Transfers Regulations 2021. However, Government data from 2023 paints a different picture: out of 290,000 pension transfers, only 2,700 (1%) raised a scam risk flag, and just 300 resulted in a red flag. Most amber-flagged transfers (96%) eventually completed, with the delay often only due to missing information, not scam concerns.

A common reason for amber flags is the presence of overseas investments, which are standard across many UK pension funds. Red flags are frequently triggered by incomplete documentation or failure to confirm MoneyHelper guidance, rather than evidence of fraud.

Despite the rise in red and amber flags, actual fraud cases remain low, with Action Fraud reporting 559 pension fraud cases in 2023 (up from 420 in 2022) yet most were unrelated to transfers. PensionBee warns that current anti-scam legislation, while well-intentioned, is being misapplied.

The focus on the speed of transfers is a risk for trustees trying their best to comply with their transfer due diligence obligations, whilst at the same time wanting to make sure transfers are actioned quickly so there is no criticism that a potential investment opportunity has been lost.