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Modernisation of Lloyds of London

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Released19 November 2008 

Financial Services Secretary to the Treasury Paul Myners, today welcomed the coming into force of a Legislative Reform Order (LRO) that will modernise the operation of Lloyd’s of London.

The LRO updates governance provisions in the Lloyd’s Act 1982, to reflect changes in the regulatory environment, and to remove restrictions which get in the way of the future development of the insurance market.

Paul Myners said:

"Maintaining the City’s competitiveness is a key priority for the Government. These changes will help Lloyd’s to maintain and enhance its position in the global insurance market. I am delighted that the Government’s proposals have received such widespread support."

The coming into force of the LRO follows a public consultation by HM Treasury, and approval by both Houses of Parliament.

Notes

1. In recent years, Lloyd’s has undertaken a major programme of reforms, geared to updating the marketplace and maintaining its global competitiveness. These were initiated as a result of the Chairman’s Strategy Group (which reported in 2002) and have been taken forward as a rolling series of three-year business plans, focussing on five core components of Lloyd’s business, including performance management and improving the efficiency and effectiveness of Lloyd’s operating environment.

2. To complement these market based and market led initiatives, the Government agreed in June 2007 that it would bring forward proposals with the aim of updating and streamlining Lloyd’s governance procedures and removing unnecessary restrictions on how it organises its affairs.

3. A Legislative Reform Order is a Statutory Instrument made under the Legislative and Regulatory Reform Act 2006.

4. The draft Order will implement the following eight reforms:

  • 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 that one of the Chairman and Deputy Chairman is always 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).

5. More information about the consultation and the results

6. The House of Commons report (Parliament website, opens in a new window)

7. The House of Lords report (Parliament website, opens in a new window)


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Article Published/Sorted/Amended on Scopulus 2008-11-21 10:39:31 in Business Articles

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