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Breaking barriers: Intersectionality discrimination and the new EU Women on Boards Directive
The concept of intersectionality discrimination - namely how a person’s individual social attributes, such as race, gender and sexuality, connect and interact to create unique experiences of discrimination - and the promotion of gender diversity in corporate leadership has been enshrined in legislation through the EU’s introduction of the Pay Transparency Directive (EU) [2023] (PTD) and the Women on Boards Directive (EU) [2022] (WOBD).
By 30 June 2026, listed companies must ensure that 40% of non-executive director positions or 33% of total board positions are occupied by members of the under-represented agenda, as required by the WOBD. The PTD requires employers to report on the pay gap between female and male workers, starting on 7 June 2027.
Why complying with DORA may be beneficial for your business in the EU and the UK
On 17 January 2025, the Digital Operational Resilience Act (DORA) took effect across the EU. DORA is designed to streamline Information and Communication Technology (ICT) risk management, introducing sweeping changes for both EU financial entities and ICT service providers, including those based outside the EU.
Case developments
Listed Securities Claims Averted as Passive Investors are Struck Out
In October 2024, in an English High Court judgment that will be welcomed by financial lines insurers, it was held that for investors’ listed securities claims to succeed, the claimants had to prove that they actively relied on misleading statements.
Regulatory developments
Buy Now, Pay Later (BNPL) Regulation
On 17 October 2024, the UK Government announced plans through a consultation that ran until 29 November 2024, to regulate the Buy Now, Pay Later sector to enhance consumer protection. The Financial Conduct Authority (FCA) will oversee this regulation, which is expected to be implemented by 2026. BNPL providers will be required to clearly disclose terms and conditions to consumers. Mandatory checks will ensure that consumers can afford the credit they are offered. Consumers will have the right to escalate complaints to the Financial Ombudsman Service (FOS).
Financial Conduct Authority (FCA) roundup
FCA Market study into the distribution of pure protection products to retail customers
In March 2025 the FCA launched a market study to assess whether pure protection insurance products – such as term assurance, critical illness cover, income protection, and whole of life insurance – are providing fair value to consumers.
While the FCA has observed good outcomes and relatively few complaints, concerns remain around the impact of commission structures on product value and consumer outcomes. The study will explore whether commissions are driving poor advice (such as unnecessary switching), inflating premiums, or affecting product design.
This follows a consultation on the study’s scope in 2024. The FCA aims to publish initial findings and next steps by the end of 2025.
Payment Systems Regulator abolished
On 11 March 2025, the UK Government announced that it would abolish the Payment Systems Regulator (PSR).
The PSR – which looks after payment systems like Faster Payments and Mastercard – will mostly be consolidated into the Financial Conduct Authority. The regulator will continue to have access to its statutory powers until legislation is passed by Parliament to enact these changes.
In the interim period, the PSR and the FCA will work closely to deliver a smooth transition of responsibilities.
Simplifying investment product disclosures
On 19 December 2024, the FCA proposed replacing complex EU disclosure rules with a more flexible approach tailored to UK investors. This initiative aims to provide clearer and more understandable information to consumers, enhancing decision-making in investment products.
Extending motor finance complaint deadlines
On 19 December 2024, the FCA extended the deadline for customers to file complaints about historic motor finance deals involving undisclosed commission payments until 4 December 2025.
This follows a October Court of Appeal for three related cases, Johnson v FirstRand Bank Limited, Wrench v FirstRand Bank Limited and Hopcroft v Close Brothers where the claimants entered into credit agreements arranged by motor dealerships and provided by the defendants, to purchase vehicles. The ruling deemed such undisclosed commissions unlawful. The Supreme Court will hear an appeal against the Court of Appeal’s judgment in early April 2025.
The FCA will confirm within six weeks of the Supreme Court’s decision if they will establish their own redress scheme and, if so, how that will progress.
Implementing crypto firm regulations
On 16 December 2024, the FCA announced proposed regulations for crypto assets that have been published in a new discussion paper, covering crypto asset trading, regulation of stablecoins, custody and other core activities. Clear crypto regulation will improve the integrity of the UK’s crypto markets, help protect people by increasing transparency and support the UK's growth and competitiveness.
Seeking views on enforcement transparency proposals
On 28 November 2024, the FCA published the second phase of its consultation on proposals for a measured increase in transparency about its enforcement investigations, and set out plans for further engagement after significant concerns were raised in relation to the original consultation.
On 12 March 2025, the FCA advised that, due to a lack of consensus, they would not take forward their proposal to shift from an exceptional circumstances test to a public interest test for announcing investigations into regulated firms.
ESG ratings providers regulation
On 15 November 2024, the FCA welcomed the UK Government’s move to bring ESG ratings providers under formal regulation. This step is part of a broader effort to enhance transparency and reliability in ESG-related financial services. The FCA will consult on the regulatory framework and implementation timeline in early 2025. This move aligns the UK with global trends, as regulating ESG ratings has been widely supported by industry and stakeholders. The regulation of ESG providers is expected to improve investor confidence and ensure ESG claims made by firms are backed by accurate data.
Modernising the redress system
On 15 November 2024, the FCA and the Financial Ombudsman Service jointly issued a call for input to modernise the UK’s financial redress system, focusing on improving consumer outcomes and providing greater stability for firms. The initiative aims to address challenges during mass redress events, enhance collaboration through the Wider Implications Framework, and prevent systemic issues from escalating. This effort aligns with the government’s push for a predictable regulatory landscape that supports growth and competitiveness. Stakeholders were invited to provide feedback by 30 January 2025, with outcomes and next steps expected in mid-2025.
Enhancing transparency in bond and derivatives markets
On 5 November 2024, the FCA outlined plans to improve transparency in these markets, ensuring investors have better access to information and reducing compliance costs for firms. The new rules are set to take effect from 1 December 2025.
Prudential Regulation Authority (PRA) roundup
Diversity and inclusion statement
On 11 March 2025, the PRA and the FCA confirmed that they do not plan to publish new rules for diversity and inclusion and do not intend to consider this area further until after the substantive implementation of any new legislation in this area.
Stress testing consultation
On 18 December 2024, the PRA announced the postponement of the dynamic general insurance stress test (DyGIST) launch. This exploratory exercise, which is designed to assess both industry resilience and risk management is now expected to commence in May 2026.
Postponing the DyGIST is intended to reduce the burden on general insurers in 2025 as they prepare to report on the new Solvency UK regulatory returns and allow more efficient use of PRA resources.
Solvency II reforms
In mid-November 2024, the PRA published PS 15/24 – Review of Solvency II: Restatement of assimilated law, detailing the restatement of assimilated Solvency II law into the PRA Rulebook. This marks a significant step in the UK’s transition to ‘Solvency UK,’ aiming to tailor insurance regulations more closely to the domestic market. The new rules came into effect on 31 December 2024.
On 12 November 2024, the PRA, in collaboration with the FCA and the Bank of England, issued SS6/24. This supervisory statement sets out expectations for critical third parties (CTPs) that provide services to the UK financial sector. It outlines the duties and obligations of CTPs under the Financial Services and Markets Act 2000, as amended by the Financial Services and Markets Act 2023. The objective is to manage risks to the stability and confidence in the UK financial system arising from potential failures or disruptions in services provided by CTPs.
On 18 December 2024, the PRA published a policy statement (PS) providing feedback to responses to consultation paper (CP) 2/24 – Solvent exit planning for insurers. This PS is relevant to UK Solvency II firms, non-Directive firms and the Society of Lloyd’s. The Preparations for Solvent Exit Instrument will come into force on 30 June 2026. Firms are expected to meet the expectations in SS11/24 by that date.
Climate Change Adaptation Report 2025
On 30 January 2025 the PRA published their third climate change adaptation report.
The report looks at the steps banks and insurers have taken to respond to the impacts of climate change. It also announces the release of a consultation paper seeking views on an update to supervisory statement (SS) 3/19 which will provide greater clarity on the outcomes expected of firms in their management of climate risks.
US updates
SEC’s climate-related disclosures rule remains stayed
Shortly after the SEC’s climate-related disclosures rule went into effect in March 2024, several lawsuits challenging the climate rule were brought by U.S. states, private companies, and other parties. The SEC subsequently stayed the climate rule pending the outcome of two consolidated lawsuits before the Eighth Circuit Court of Appeals – Iowa v. SEC and Liberty Energy Inc. v. SEC. The consolidated lawsuits remain pending before the Eighth Circuit.
Evian greenwashing case dismissed
In November 2024, Danone Waters of America, the maker of Evian spring water, successfully dismissed a putative class action that was filed in the U.S. District Court, Southern District of New York. Plaintiffs alleged that Evian’s water bottles were deceptively labelled as “carbon neutral”, which plaintiffs’ asserted was “greenwashing”, because they were led to believe the manufacturing of the bottles did not produce CO2 or pollution. Although the court initially denied Danone’s motion to dismiss in part, the court later reversed its decision and dismissed the case entirety, finding that a reasonable consumer would “look beyond the front of the label” and read the back label which explained the meaning of “carbon neutral.”
Artificial Intelligence and D&O claims
AI claims continue to be brought against companies and their directors and officers. In October 2024, investors brought a securities class action suit against Xioa-I, a Chinese Robotics Company and its directors and officers, alleging, among other things, that the company overstated its AI capabilities, and the necessary investment required to become competitive in the AI industry.
Webinars
Sustainability and ESG global webinar series - 16 January 2025: Climate risks
Kennedys Partners Alexandra Nurse, Hannah Williams and Matthew Ferguson discussed the impact of climate risks on financial lines policies, including climate litigation developments and climate reporting and disclosures.
Insurance and reinsurance
United Kingdom