UK Treasury Plans Competitiveness Boost For Lloyd's Of London

by Robert Lee, Tax-News.com, London

10 March 2008

Exchequer Secretary to the UK Treasury, Angela Eagle, has launched a consultation on proposed measures designed to improve the competitiveness of the Lloyd's of London insurance market.

In a statement issued by the Treasury on Friday, Eagles explained that the new measures would modernise the governance arrangements of Lloyd's of London, and would remove restrictions which impede the way the Lloyd's insurance market operates through a Legislative Reform Order (LRO), a Statutory Instrument made under the Legislative and Regulatory Reform Act 2006.

The Treasury's consultation document states that: "As befits an LRO, the proposals have a very practical focus: they aim to remove restrictions or administrative burdens and unnecessary bureaucracy. They do not make any amendment to the fundamental constitutional aspects of Lloyd’s current governance arrangements, such as rules on members’ voting rights."

In summary, the government proposes to:

• Relax the rule requiring the Chairman and Deputy Chairmen to be working members, so that these posts may be filled by any member of the Council, provided always that one of the Chairman and Deputy Chairman is a working member;
• Remove restrictions on elections to the Council affecting working members, to permit more flexibility and greater alignment with the Combined Code;
• Remove the requirement for the Governor of the Bank of England to approve appointments of nominated members of Council, as this duplicates the Financial Services Authority’s approval process;
• Remove the provisions relating to the Committee of Lloyd’s;
• Modernise and streamline the Council’s delegation powers, while preserving the Council’s existing reserved powers;
• Ease restrictions on the composition of Disciplinary Committees;
• Remove the restriction that requires managing agents generally to accept business only from a Lloyd’s broker, while retaining the class of “Lloyd’s broker” for brokers that want to bear the title of “Lloyd’s broker”; and
• Remove the divestment provisions (which prohibit prescribed associations between Lloyd’s brokers and managing agents), in favour of a new mechanism, consistent with the Financial Services Authority’s regulatory requirements, which will allow the Society to monitor potential conflicts of interest between managing agents and associated brokers, and provide transparency on such associations to members.

The consultation, which closes on 30th May, 2008, is part of the government's ongoing commitment to support City competitiveness, and follows its promise last year to bring forward proposals in 2008.

Launching the consultation, Angela Eagle commented:

"The reforms I am proposing today complement the reforms that Lloyd's itself has already put in place, and will help it continue to compete in the global insurance market of the 21st century.

"This consultation is a chance for anyone with an interest in the future of Lloyd's to influence these proposals, and I welcome comments from all concerned."

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