Legislative Reform (Lloyd’s) Order 2008

I am grateful to the noble Lord, Lord Newby, and I very much appreciate his anxiety in relation to his last point. On his earlier point concerning how soon the controls will be in place, there will be a slight delay following the passage of this order before the mechanism is in place, but I assure him that it will be very short and that it should not give cause for concern. Lloyd’s has published its draft by-law imposing the standards. It is intended that it will be in force in the new year, so all the work has been done and it will follow very rapidly on the passing of this order. I turn to the question of whether the new system will provide sufficient protections, and I agree with the noble Lord, Lord Newby, that this is absolutely critical. The new rules will require additional disclosure from managing agents, so more information will be available. They will have to reveal any broker associations in their syndicate business plans and say how they intend to manage them. They will also have to report regularly to Lloyd’s and to syndicate members the proportion of business that they have done with associated brokers, so that information will be provided. Most of those who responded to the document to which the noble Lord referred thought that this protection would be adequate and, indeed, that it was likely to prove better than the existing system. On effectiveness, the FSA raises its head, and I am conscious that the noble Lord and I have debated such issues in a wider context in recent months. The FSA has rules on conflict of interest in financial services and has been operating these for a number of years. I recognise the pressure on the FSA with regard to crucial issues with the banking system in recent months and over the past year or so. But it has not been suggested that the FSA has failed to enforce the conflict of interest regulations. Our proposers will ensure that the FSA, Lloyd’s and syndicate members have much greater information at their disposal, which will ensure that the actions of managing agents are subject to monitoring at all three levels, assisting enforcement in this area. That point has been considered. The initial information and the necessary protection which the noble Lord has identified is a crucial aspect of the order with regard to the governance of Lloyd’s. To end on a most unexpected note, I believe I heard—although I may have misheard—the noble Lord, Lord Newby, offering some praise to the Treasury. This is a rare event.