Management Liability Market Update: Q3 2025

Posted on October 22, 2025March 3, 2026 by Jo Newman

Management Liability Market Update: Q3 2025

The Management Liability (ML) Insurance market continues to favour clients. In most cases, premiums are either reducing or holding stable – a product of the ample capacity available for most risks. But with several insurers pointing to the arrival of the bottom of the market cycle, premiums could be set to edge upwards in the medium term.

In the meantime, insurers are focused on retaining clients by differentiating their offering. This includes broadening coverage, such as through “any one claim” limits, increasing sub-limits, removing or reducing the scope of additional restrictions, and offering Long Term Agreements.

Others are innovating, with the launch of new products: a new BHSI enhancement offers clients in some sectors a reduced retention for selecting their Panel defence counsel; Chubb have launched a new product tailored for Investment Portfolio companies, offering co-defendant coverage for the investment backer; and Beazley are willing to consider an entity EPL sub-limit under an insured’s D&O policy, regardless of their size.

As new employment laws come into effect, D&O insurers are looking to increase their premium intake by expanding into affiliated insurance products – including Crime and standalone Employment Practices Liability. Standalone D&O run-off may also be available for clients looking to ringfence the liability of past directors (such as in spin-outs), or where acceptable pre-agreed terms are not available from incumbent insurers.

Key trends

Geopolitical tension brings greater risk – The D&O landscape is being reshaped by global trade disruptions, protectionist policies, and regulatory uncertainty. These are driving increased costs and financial volatility, heightening the risk of claims relating to disclosure failures, mismanagement, and regulatory breaches.
Cyber threats bring D&O risk – Amid recent high-profile cyber incidents in the UK, boards face growing scrutiny for cybersecurity governance failures. Aligning cyber and D&O coverage is key to mitigating risk.
More frequent Side A claims – According to some primary insurers, around half of non-US claims are Side A losses (insured person costs that have not been indemnified by their employer). The main drivers were insolvencies, financial fraud, and ESG-related claims. Many clients are using recent premium savings to increase their Side A DIC limit. Lockton’s APEX product is one potential solution.
Restructuring and workforce changes – As financial pressures prompt job cuts and leadership reshuffles, EPL claims and whistleblower actions are expected to rise. In parallel, recent and forthcoming employment legislation is set to expand employer responsibilities, increasing the potential for claims.
Expanding director accountability – Directors are increasingly responsible for ESG, ethical sourcing, data governance, and workforce changes, with technology and AI oversight set to dominate board decisions. D&O insurers anticipate rising claims tied to alleged breaches of fiduciary duties, disclosure oversights, and emerging risks such as AI-washing.
Inflation and legal costs inflation – We expect ongoing inflation and complex litigation to continue driving up defence costs.

In depth: New legislation triggers workforce risks

The Worker Protection Act 2024 focusses on the prevention of sexual harassment in the workplace, and the Employment Rights Bill (to become law in 2026) is working through parliament and will include proposals such as:

Zero-hour contracts: End zero-hour contracts and introduce guaranteed hours for some workers.
Fire and rehire: Restrict employers’ use of “fire and rehire” practices.
Sexual harassment: Require employers to take steps to prevent sexual harassment.
Prevent the use of Non-Disclosure Agreements: To prevent workers speaking out about allegations of harassment or discrimination.
Parental and bereavement leave: Establish leave rights from the start of employment.
Flexible working: Require employers to allow flexible working where practical.
Notice of shift changes: Require employers to give reasonable notice of shift changes, and pay compensation for shifts cancelled at short notice.

All of these regulatory changes have the potential to lead to more frequent employment practices claims against directors if they fail to keep up with changes in legislation.

Further reading: Protecting the workforce: preparing for the new duty on employers to prevent sexual harassment

Cyber events driving D&O scrutiny

Recent high-profile UK cyber incidents have intensified board-level focus on cyber risk management. These events have prompted many insureds to reassess their exposure – to cyber-attacks, but also to D&O claims:

Boards are increasingly held accountable for cybersecurity governance failures, with regulators scrutinising their oversight responsibilities.
D&O insurance may respond to shareholder litigation, regulatory investigations and civil fines stemming from cyber-related mismanagement.
Missteps can trigger D&O claims – such as poor preparation, ineffective response, unanticipated supply chain disruption, or failure to secure appropriate cyber coverage.

Companies are advised to align cyber and D&O policies to avoid coverage gaps and ensure resilience in the face of increasingly sophisticated attacks.

Find more detail here: How D&O insurance can help protect against cyber related liability
To learn more about our solutions visit our Management Liability page.

Jo Newman, Senior Vice President, Lockton

E: jo.newman@lockton.com

Ian Nichol ACII, Senior Vice President, Lockton

E: ian.nichol@lockton.com

Targeted Support: a new era of accessible financial advice?

PIMFA Journal #32

What better data could do for you

PIMFA Journal Edition #32

Posted on October 17, 2025March 13, 2026 by Nigel Ross-Scott

Go Beyond Index Data: Unlocking the Full Value of Index Providers

Insurer & Underwriter Attitudes on IFA Firms Advising on Inheritance Tax (IHT) Products

The Cost of Complacency: Cyber Threats Facing UK Financial Firms

From oversight to insurance: How AR reforms reshape principal risk

The AI Advantage: How to Revolutionise Business Growth with Reverification

Start Small. Move Fast. Stay in Control: Tackling Innovation Bottlenecks in Wealth Management

Non-financial misconduct – latest word from the FCA

PIMFA Summary FCA Consumer Duty Update

The Financial Conduct Authority (FCA) has published further plans to streamline rules following the introduction of Consumer Duty. Read our summary here.

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PIMFA responds to HMT’s Financial Ombudsman consultation

Posted on October 12, 2025March 5, 2026 by Simon Harrington

8 October 2025

The review seeks to ensure the FOS continues to provide a fair, free, and accessible service for consumers while addressing long-standing industry concerns about consistency and alignment with FCA rules.

Simon Harrington, Head of Public Affairs at PIMFA, says: “The Financial Ombudsman Service plays a vital role in giving consumers confidence to engage with financial services. We welcome the government’s proposals to reform the fair and reasonable principle in order to align FOS determinations more closely with FCA rules. This should provide firms with greater clarity, certainty and confidence going forward. However, for wealth and advice firms, we retain concerns about how effective these proposals will be given they still allow FOS to exercise judgement outside of the rigid parameters of FCA rules.

“Without further adjustment to the proposals – to ensure FOS gives full and balanced consideration to the evidence provided in all circumstances of any case – there remain too many opportunities for it to exercise subjective judgement. Whilst not a criticism, it is simply true that many FOS caseworkers are not qualified to the same standard as professional advisers, creating uncertainty about how technical evidence will be assessed consistently. This is particularly true in the case of assessing suitability. Under the proposed new rules, a firm could undertake an extensive, Consumer Duty-aligned assessment of the client’s attitude to risk and recommend a course of action understood and agreed. Yet, under the ‘fair and reasonable’ test, the FOS could still determine that the firm’s judgement was wrong based on a subjective view of the same evidence. This does not represent meaningful progress.”

Other key points raised by PIMFA as part of its consultation response include:

Alignment with FCA rules: PIMFA supports the principle that firms acting in compliance with FCA rules should be considered to have acted fairly and reasonably, but calls for DISP 3.6.4 to be amended so FOS applies rules rather than just taking them into account, thus reducing uncertainty for firms.
FOS as a quick and accessible service: PIMFA acknowledges the FOS’s foundational role as a simple dispute resolution service, but notes that potential compensation of up to £445,000 creates tension between speed and risk for firms, particularly for complex or long-term advice cases.
Referral to FCA or courts: PIMFA welcomes proposals allowing firms to request FCA views on rule interpretation and for FOS to refer inappropriate cases to courts, arbitration, or other complaint schemes.
Transparency: PIMFA encourages more transparency around FOS decisions, including the publication of quarterly thematic reports alongside a reduced set of anonymised case outcomes, to help firms understand and learn from trends.
Independence: PIMFA supports maintaining FOS operational independence while encouraging closer alignment with the FCA to provide consistency without undermining consumer trust.
Better use of existing powers: PIMFA encourages the FOS to make better use of the oral hearings process and, in particular, the use of subject matter experts where complex cases arise.

Simon Harrington adds: “Overall, the package of reforms is positive and largely addresses longstanding industry concerns. Yet significant uncertainties remain, particularly regarding the treatment of complex complaints. Addressing these issues will be crucial if the reforms are to truly support firms to grow and innovate without undue risk. With some refinements – particularly around the application of rules to complex complaints and evidence weighting – these changes could strengthen consumer confidence while supporting firms to grow and innovate in a predictable regulatory environment.”

PIMFA’s consultation response is available in full here.

Notes to Editors

About PIMFA
PIMFA (the Personal Investment Management & Financial Advice Association) is the trade association for firms that provide wealth management, investment services, and financial advice and planning to everyone from individuals and families to charities, pension funds, trusts and companies.

The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.

PIMFA represents both full and associate member firms. Full members provide a range of financial solutions, including wealth management, financial advice and planning, as well as investment and execution services. They assist everyone from individuals and families to charities, pension funds, trusts and companies.  Associate members provide professional services to the PIMFA community.

PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to help create a UK culture of thriving financial health through constructive advocacy, fostering connections, and providing practical support.

PIMFA was established in 2017 as a result of the merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA), which has a history as a trade association dating back to 1991.

Further information can be found at pimfa.co.uk

Wealth management and advice sector urges clearer, more consistent regulation to better support clients and unlock growth potential

Posted on October 12, 2025March 5, 2026 by Simon Harrington

2 October 2025

Almost all PIMFA member firms say that regulatory change is diverting time and resources that could otherwise be devoted to other priorities.
54% of respondents identify clearer, more consistent regulatory communication as their top priority for the next 12 months, followed by simplified reporting and reduced duplication of returns (48%).
Eight in ten (79%) of firms report an increase in compliance expenditure over the past 12 months, with firms split on clarity over how best to remain compliant overall.

The inaugural PIMFA Regulatory Insights Tracker, which surveyed 52 of its member firms, shows that while the sector recognises the importance of proportionate regulation, the volume of reforms and lack of clarity in communications are having a significant impact on day-to-day operations. The sector, which manages over £1.65 trillion in private savings and investments, is clear that greater regulatory clarity and consistency are essential if firms are to continue supporting clients and contributing to long-term UK growth.

Nearly all respondents (96%) agreed that regulatory change is diverting time and resources away from other priorities, with almost a third (29%) stating that this is happening to a “large extent”.

When asked which regulatory priorities should be at the top of the agenda for the next 12 months, a majority (54%) of firms pointed to the need for clearer and more consistent regulatory communication, ahead of simplified reporting and reduced duplication of returns (48%).

Compliance costs are also front of mind, with almost eight in ten (79%) firms reporting an increase in compliance expenditure over the past 12 months. While a narrow majority (54%) said they now feel clearer about what is required to remain compliant compared with this time last year, nearly half (46%) still do not feel clearer about how to best remain compliant with regulatory requirements overall.

The Tracker also reveals the extent to which Consumer Duty is dominating firms’ compliance activity. More than four-fifths (85%) of respondents said it was the requirement demanding the single most time and attention, followed by customer vulnerability (52%). Looking ahead, just under four in ten (39%) agreed that proposed changes around Targeted Support and Simplified Advice would help their firm deliver better outcomes for more customers.

David Ostojitsch, Director of Government Relations and Policy at PIMFA, commented on the findings: “The wealth management and financial advice sector plays a critical role in supporting households, businesses and the wider economy, managing over £1.65 trillion in savings and investments. These findings indicate that while our members are committed to delivering the best possible outcomes for clients, the cumulative impact of regulatory change is making it harder for firms to do so, while juggling other priorities.

“There has been real progress in some areas, and we welcome the work the FCA are doing to improve this burden for firms, but there remains more to do. In line with its desire to be a smarter regulator, we need to see a regulatory framework that is simpler, more proportionate and more consistent for firms to thrive and continue supporting long-term growth in the UK economy.”

The Regulatory Insights Tracker marks the first in a new series of regular surveys designed to capture member sentiment towards the regulatory landscape. This inaugural set of results provides a benchmark view of how firms are experiencing and responding to the current compliance environment, and will inform PIMFA’s ongoing policy and advocacy work.

Notes to Editors

Methodology
The findings are drawn from PIMFA’s inaugural Regulatory Insights Tracker. Data was collected in September 2025 from 52 member firms, including wealth managers, financial advisers and financial planners.

Responses were anonymised and aggregated to provide a snapshot of industry-wide perspectives on current regulatory challenges.

The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.

Further information can be found at pimfa.co.uk

PIMFA Ongoing Advice Services - Guidance for firms

This Guide has been developed by PIMFA to assist firms in designing an appropriate approach to ongoing advice services which is aligned to regulatory expectations. Whilst not intended to be exhaustive, it includes practical steps that firms can take to implement and enhance their approaches. It also includes real-world examples, based on interviews with member firms, of how firms in the sector have addressed issues or implemented changes.

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PIMFA Financial Crime Conference 2026

The threat of financial crime remains an existential one for firms to guard against, for the benefit of their clients, and for their very survival. Building on the success of previous events PIMFA will convene a mix of regulators, law enforcement, governmental representatives, technical experts, sector specialists and member perspectives, to give the audience the knowledge to protect themselves and do their part contributing to tackling the issue.

As in previous years, this event is aimed not just at financial crime professionals and MLROs, but at anyone in a senior management or compliance function, working to ensure firm’s work is safe for clients, and one step ahead of the various threat actors acting against the financial services sector in 2026. Book now to reserve your seat (press are not eligible for this event, and spaces are limited on a first come, first served basis).

Focus: Supporting Practice