European Commission satisfied with Lloyd’s regulation

The European Commission says it has formally closed its proceedings relative to the regulation of Lloyd’s of London. In December of 2001, the commission had launched “infringement proceedings”, citing concerns over the insurance market’s supervision.
Despite assurance by U.K. authorities that the Financial Services and Markets Act, which also came into force in December 2001, would change the supervision of Lloyd’s, the commission says it still had concerns over Lloyd’s compliance with non-life aspects of the European Insurance Directives.
The commission now says is satisfied Lloyd’s is meeting the directives. “I believe that the commission’s infringement proceedings have had a stron influence in the development of a new legal framework in the U.K. for the regulation and supervision of Lloyd’s that is in line with the requirements of the EU insurance directives,” says “internal market” commissioner Frits Bolkestein.
Originally, the EU’s concerns related to auditing arrangements for the market, and to the U.K. authorities’ supervision of solvency. In addressing these concerns, the commission notes that U.K. authorities now have much greater control over Lloyd’s and should have better information about risks faced by the market. As well, auditing and reporting arrangements have improved. Subsequent to the new FSMA, tighter controls are in place, include those regarding solvency verification.
The investigation was in response to several complaints, and the commission notes that it has informed these complainants of the file on Lloyd’s being closed.