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UK: Class actions and whistleblowing –changes to D&O policies

Lydia Savill

Lydia Savill,


Danielle Secher

03 November 2015
Class Actions

  1. The reforms

The CRA has introduced a procedure for bringing class actions. Previously, all claims for breaches of competition had to be brought in the High Court. There was no mechanism for collective proceedings at all. Now, the Competition Appeal Tribunal ("CAT") has been empowered to hear class actions for breaches of competition law on an opt-in or opt-out basis.

If the CAT approves an opt-out class action, all eligible claimants domiciled in the UK will be included in the action automatically. It is more likely that opt-out claims will involve consumer claimants than business claimants, as opt-in consumer claims are often less feasible than opt-in business claims.

The CAT will make an aggregate award of damages where class actions are successful. It is for the individual claimants in the class to recover their share of the damages from the "representative claimant"

The rules came into force on 1 October 2015. For claims arising and issued after 1 October 2015, the limitation period is six years after the cause of action (i.e. the infringing conduct and loss) accrues. There are transitional rules for claims arising pre-October 2015, which may create a degree of uncertainty and deter potential claimants.

  1. The impact of the reforms

The introduction of class actions will make it easier for consumers to bring claims. It is predicted that opt-out class actions will lead to larger pay-outs due to the higher number of claimants involved. In particular, these reforms increase the exposure of customer-facing businesses.

A rise in claims means there is potential for more claims against D&O policies. There may also be greater uptake of D&O insurance as a result.

However, these reforms should not cause panic among businesses. Claimants will still face significant funding obstacles, which will make claims less attractive. In order to bring a class action, there must be an appropriate "representative claimant" to bear the risk of funding the litigation. There are options available for third party funding or after-the-event insurance. However, contingency based arrangements are not permitted for opt-out claims.


The FCA and PRA have published rules on whistleblowing, which will come into force on 7 September 2016.

The new rules enforce better procedures for blowing the whistle on malpractice. This may result in more whistleblowing (and a concomitant rise in D&O claims). However, many companies already have good procedures in place, so the potential for a rise in claims is uncertain.

The new rules require employees to be informed of their rights to whistleblow, and complaints are likely to be made against senior staff (including directors and officers).

Whilst D&O underwriters should be concerned about the increased regulatory regime, the whistleblowing rules are less of a concern than the CRA rules on class actions.

Lydia Savill

Lydia Savill,


Danielle Secher

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