EC Drops Probe of Lloyd’s Regulation

October 16, 2003

The European Commission, the European Union’s regulatory authority, has dropped an investigation of the British government’s rules concerning the Lloyd’s market.

The EC began the probe in response to complaints by a number of Lloyd’s “Names,” who lost money when they were required to contribute large amounts to pay for asbestos and environmental claims. They charged that the losses were mainly due to insufficient regulatory supervision by the British government in violation of EU directives. Up until 2001, when it became subject to the U.K.’s Financial Services Authority, Lloyd’s was largely self-governing.

The EC’s decision indicated that it was satisfied that the current regulations governing Lloyd’s were in line with its standards. It left open the possibility, however that aggrieved “Names” could still pursue actions in U.K. courts for losses suffered as a result of inadequate regulation in the past.

A report from Reuters cited remarks by Roy Perry, a Member of the European Parliament from the U.K., who represents the Lloyd’s “Names,” as indicating that the decision had failed to address their main contention that the U.K. had failed to properly supervise Lloyd’s during the ’80’s and ’90’s when the huge losses occurred. Perry called on the EC to answer that question by November 15.

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