The Pension Protection Fund (PPF) pays compensation to members of eligible occupational pension schemes on employer insolvency. To fund this, schemes pay a pension protection levy, the risk-based element of which reflects the level of scheme underfunding and the probability of PPF entry during the next year. One factor in the calculation of employer insolvency is the “failure score” produced by Dun & Bradstreet (D&B).

D&B attributes a failure score on 31 March each year, representing each employer’s probability of insolvency, ceasing to trade and being unable to pay all its creditors within the next 12 months. If the company’s failure score appears incorrect, an appeal may be made for a recalculation within 28 calendar days of the issue of the levy invoice. However, the failure score can be requested at any time, and an appeal may be lodged before the invoice is received. Should the appeal be rejected, there is a maximum of 28 days to escalate the appeal to the next level. In exceptional circumstances, D&B may allow an extension of this time limit. D&B has a five stage appeal process dealing with failure score complaints, the first being a customer services review and data validation. Further stages are:

The appeals process can be lengthy and costly, with each stage requiring a written submission. The appeal grounds are relatively narrow and the structure is rigid. D&B seems reluctant to consider arguments concerning the process itself.

Case law confirms that the obligation to provide financial information to D&B extends only to filing data with the relevant registry. Accounts filed by the applicable deadline are assumed to be “available”. To check that D&B has accurate company data, trustees and employers should obtain the failure score of each scheme company as early as possible in the year before that score will have an impact on the levy calculation. Mistakes may then be rectified before they result in a higher pension protection levy. Separate advice should also be sought on possible actions to improve failure scores.

Following a joint review by the Law Commissions of England and Wales and Scotland, the Consumer Insurance (Disclosure and Representations) Bill has been put before Parliament to reform insurance contract law for consumers. The Bill is expected to move through Parliament with little, if any, opposition and to come into force in 2013.

The Law Commissions of England and Wales and of Scotland began their review of insurance contract law in 2006. Calls for reform of the law on misrepresentation and non-disclosure in insurance contracts are not new. A law reform committee first recommended reform in 1957, followed by further calls in a 1980 report.

There has been widespread support for reform in the area of consumer contracts as the existing law can have harsh consequences for a public largely oblivious of their legal obligations. Insurers, brokers, consumer groups, lawyers and the Financial Ombudsman Service (FOS) have all recommended legislative reform to clarify these obligations.

The current law, set out in the Marine Insurance Act 1906 (MIA) requires prospective insureds to volunteer information about the risk for which they are seeking insurance. Section 18 of the MIA requires insureds to disclose those “material circumstances which would influence the judgement of a prudent insurer in fixing the premium, or determining whether he will take the risk”. Failure to do so will allow the insurer to avoid the contract. At present there is no obligation in law for the insurer to ask questions in relation to those facts a professional underwriter would wish to know.

The Bill proposes to change the nature of the parties’ pre-contractual negotiations so that insurers are obliged to ask those questions which they want to know about the risk. In response, consumers will be under a new duty to take reasonable care to answer the questions asked by the insurer fully and accurately.

Where a consumer has made a mistake in answering the insurer’s questions, the Bill makes a distinction between “careless” and “deliberate or reckless” misrepresentations. The remedy which an insurer will have in the event of a misrepresentation will depend upon the category of mistake.

The remedies for the various types of misrepresentations are as follows:

The Bill requires that insureds take reasonable care not to make a misrepresentation. The standard of care will be that of “a reasonable consumer” but an additional element is added which demands that the insurer should take into account the actual circumstances of the individual consumer where they are aware of them. It further includes an additional specification to clarify that a dishonest misrepresentation (even if reasonable to the average consumer) will always be unreasonable.

The Bill also changes the law in relation to when an intermediary will be considered to be acting for the insurer rather than the insured and outlaws the much criticised “basis of contract” clauses which can convert a pre-contractual representation into a contractual warranty.

The Bill has been welcomed by most in the market. The gap between the letter of the law and both industry and FOS practice has been widely criticised. Whether or not other Law Commission proposals for reforming insurance contract law reach Parliament remains to be seen.

After days of political horse-trading at Whitehall, the Conservative Party and the Liberal Democrat Party have agreed a "Con-Lib pact". In addition to the budget deficit, the UK's new Coalition Government will have to deal with widespread concern about the extent to which the current pension system will cope with providing sufficient retirement benefits for an ever-aging population.

Former Conservative Party leader, Iain Duncan Smith has been appointed as the Secretary of State for the Department of Work and Pensions and Steve Webb (Liberal Democrats) has been appointed the new Pensions Minister. This article considers the key pension policies announced in the Con-Lib pact that they will be charged with implementing.