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Pinsent Masons Insurance Briefing: 3 April 2019

Latest fortnightly round-up of insurance, legal and business developments with analysis and commentary from the insurance team at Pinsent Masons.

The main topics we're focusing on this week are:

Financial ombudsman clarifies Equality Act powers

The head of the UK's Financial Ombudsman Service (FOS) has confirmed that the body has the power to require financial services firms to make reasonable adjustments for consumers with disabilities or to stop discriminating against people with other 'protected characteristics' where it considers they have not been treated fairly, and has already done so on occasion. Under the Equality Act 2010, it is unlawful to discriminate, harass or victimise people on the grounds of a protected characteristic under the Act. Those characteristics are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex or sexual orientation. Organisations are obliged to anticipate and put in place reasonable adjustments to avoid people with disabilities being put at a disadvantage. What is 'reasonable' will vary from case to case depending on the individual circumstances. Contentious regulatory financial services expert Jonathan Cavill of Pinsent Masons said: "When firms consider complaints that relate to a customer’s disability or another protected characteristic they need to take particular care to ensure that they have considered their obligations under the Equality Act. When the FOS refers to the requirements in the Act, previous decisions show that it will take a broad approach in determining what reasonable adjustments the firm should have made and these can be onerous on firms." Read more...

Lloyd's market takes action on sexual harassment

People working in the Lloyd's insurance market face potential lifetime expulsion if they are found responsible for sexual harassment, the market has confirmed.  The sanction has been endorsed by Lloyd’s Board and Council, and by the Lloyd’s Market Association (LMA) and the London & International Insurance Brokers Association (LIIBA) which represent the Lloyd’s market, as part of a package of measures set out to "create a safe and inclusive working environment". The measures have been set out in response to recent reports from 18 women, published by Bloomberg Businessweek, who described "an atmosphere of near-persistent harassment" centred on the Lloyd's exchange. The vast majority of people who work in the building are not Lloyd's employees. Financial services employment law expert Jon Fisher of Pinsent Masons said: "Lloyd’s response to the reports is welcome. Firms which participate in the market will need to ensure that they at least match the best practice Lloyd’s establishes. This will require constant vigilance to make sure that policies are fit for purpose and are properly enforced." Read more...

UK Supreme Court: car being repaired on private land not 'in use' for insurance purposes

The UK Supreme Court has confirmed that a vehicle undergoing repairs on private property is not being “used” for the purpose of compulsory motor insurance requirements. The court unanimously decided that neither UK nor EU law supports the view that “the carrying out of significant repairs to a vehicle on private property” entails the “use” of that vehicle for UK compulsory motor insurance purposes, as required in the Road Traffic Act (RTA) 1988. Insurance law expert Elaine Quinn of Pinsent Masons said the judgment would be “significant” for UK motor insurers and would clarify an area that “had been causing some concern” to the sector. "Usefully highlighted is the ongoing disparity between UK and EU law in the area. In the UK, for compulsory motor insurance purposes, the Court clarified that the 'use' of a vehicle must happen at 'a road or public place'. In those locations, that use does include instances where the vehicle may be parked. EU law goes much further since recent cases like Damijan Vnuk and Zavarovalnica Triglav and Rodrigues de Andrades and José Manuel Proença Salvador, which have extended EU compulsory motor insurance requirements to private property locations.” Read more...

Working Group outlines possible replacement of LIBOR with SONIA

A group set up by the Bank of England has outlined ways in which the Sterling Overnight Index Average (SONIA) benchmark could be referenced in new contracts, ahead of the likely phase-out of the London Inter-bank Offered Rate (LIBOR) over the next few years. The Working Group on Sterling Risk-Free Reference Rates, which was initiated by the Bank of England in 2015, identified SONIA as the preferred risk-free reference rate to replace LIBOR. The Working Group seeks to facilitate transition to SONIA by the end of 2021, but SONIA is currently only an overnight rate whereas LIBOR is produced over a range of periods of up to a year.  The Working Group's latest discussion paper is aimed at helping companies looking at referencing SONIA in new contracts. Financial regulation expert Charlotte Pope-Williams of Pinsent Masons said the paper was designed to complement the development of conventions for referencing SONIA in new contracts in the market, although the paper appeared to be aimed more at the wholesale sell-side banking industry rather than other market participants. Read more...

FCA extends TPR notification deadline

The UK's Financial Conduct Authority (FCA) has extended the deadline for financial firms providing services from the EU to the UK after Brexit to notify it under the Temporary Permissions Regime (TPR). The new deadline is in line with the UK government's agreement with the EU last week that the Brexit date would move from 29 March to 12 April, unless prime minister Theresa May can get parliament's backing for the withdrawal agreement negotiated with the EU. EU based firms and funds now have until the end of 11 April to notify the FCA they want to enter the TPR. Read more...

Brexit and Dispute Resolution

ANALYSIS: Brexit will have an impact on how cross-border disputes with a European dimension are conducted, affecting applicable law; jurisdiction, and enforcement of judgments. But the scale of these issues should not be overstated. They will not arise in every case and there are strategies for tackling them. Many businesses have long chosen the law and courts of England and Wales or another UK jurisdiction for the resolution of disputes arising from cross-border commercial deals. They do so because of the calibre of judiciary; familiarity of language; predictability of outcomes due to precedent, and respect for freedom of contract. Most of this will be unaffected by any form of Brexit. However, in cases with a European dimension, Brexit will affect the rules on the law applicable to disputes and which courts will have jurisdiction over them. It will also affect the cross-border recognition and enforcement of judgments. Read more...

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