PPF switch - Time is running out

Since the announcement last year that Experian will replace Dun & Bradstreet (D&B) as the PPF’s insolvency risk provider from April 2014 (this being the earliest monthly insolvency risk score that will count towards the 2015/16 levy), attention has turned towards the accuracy of data held by Experian in relation to companies who sponsor UK defined benefit pension schemes.

With less than three months until the switchover to Experian, many companies remain in the dark about the quality of data that Experian holds on them. This is despite potentially long timeframes involved in updating and/or correcting data.

In the past, companies have on occasion successfully appealed PPF levies for previous years, when it could be shown that D&B made a mistake in calculating the failure score. Many successful challenges regarding the data D&B held (such as D&B’s view of how promptly the company pays its invoices) have also been made, leading to back-dated corrections to failure scores part way through a levy year. Companies might be relying on such an approach in relation to the move to Experian, but this is very dangerous.

In the case of West of England Ship Owners Insurance Services, the company argued that a £168,000 rise in their 2010/11 PPF levy was unjustified because D&B had not used their latest audited accounts in their calculations. The High Court sided with the PPF and ruled that companies cannot challenge PPF levies based on failure scores calculated using out-of-date information. This covers a wide range of data from organisations such as Companies House (e.g. charges, the principals of a business, and the latest audited accounts) where a company may reasonably expect Experian to maintain an up-to-date set of data.

Even before the switch to Experian comes the new D&B model for calculating insolvency probabilities, which was expected to be used for month-ends January 2014 to March 2014. Implementation has been delayed, but it is still likely to impact the final two failure scores for the 2014/15 levy. The new model may focus on areas where companies have not had the opportunity to review and optimise their information.

Therefore, the time to act is now - to ensure the data used to calculate your failure scores is accurate.