Lloyd's to turn up heat on regulation
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Lloyd's of London will toughen its disciplinary procedures and step up the monitoring of professionals in the market in response to sharp criticism of its self-regulatory performance. "The real message is that we want to turn the heat up," David Gittings, director of regulatory services, said.
Sir Alan Hardcastle, chairman of Lloyd's regulatory board, said the tougher regime, meant finally to bring Lloyd's up to the mark of regulation elsewhere in the City, was expected to provoke consolidation among weaker operators in the market, and to oblige some professionals to drop out.
Lloyd's first regulatory plan will register all senior executives among underwriters, brokers and agents to ensure they meet high standards of competence, and to make monitoring easier.
Lloyd's system of regulating itself was savaged last year by the influential Commons Treasury select committee. Describing it as "fundamentally and irretrievably tarnished by past problems", the committee concluded that "the loss of confidence in regulation cannot be restored within the current regulatory system".
It recommended that responsibility be switched to an independent body answerable to the Treasury. Sir Alan himself was singled out for criticism as being too close to the interests of the Lloyd's management.
With the change in legislation required for such radical reform widely considered to be improbable this side of an election, Lloyd's response yesterday was seen as an attempt to salvage the current system.
But the tardiness of the response has produced considerable internal tensions, the most significant being the sudden departure last September of Rosalind Gilmore, in charge of revamping the regulatory regime at Lloyd's, who was thought to have become frustrated at the progress.
The new regulatory plan sets out for the first time core principles of behaviour and competence consistent with standards demanded by other City regulators such as the Securities and Investments Board. "This means we shall be able to go for people ignoring the spirit of these principles, and not just the letter," Mr Gittings said.
The plan also sets up a summary disciplinary process with clearly stated sanctions that will make it easier to discipline individuals, in the past a complex and slow process.
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