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22. Januar 2002

Lloyd's of London - Commissioner Bolkestein on latest action against UK authorities

The Petitions Committee was informed first-hand by Commissioner Frits BOLKESTEIN on Wednesday of the Commission's latest decision to send a second letter of formal notice to the UK authorities concerning the UK government's failure to adequately regulate the Lloyd's of London insurance market. The Commission has also sent a preliminary letter of inquiry to the UK government on the question of Equitas - the reinsurance vehicle set up to protect Lloyd's from further claims.

Despite the UK introducing the new Financial Services and Markets Act of 2000 (FSMA), the Commission still has "residual concerns" over the compatibility of this Act with current EU directives on insolvency and this is the subject of the second letter of formal notice sent to the UK authorities.

The central question for the Petitions Committee was whether the Commission should investigate previous UK legislation, relating to the regulation of the Lloyd's of London insurance market. Roy PERRY, vice-chairman of the Petitions Committee, said "The inference has to be if the Commission is still unsatisfied with the FSMA, then previous UK legislation, i.e. the Lloyd's Act of 1982, could not have been compatible with the insolvency requirements of the first non-life insurance Directive 1973, and therefore UK governments are guilty of not properly transposing EU directives."

Commissioner BOLKESTEIN, in a lively exchange with Members of the committee, underlined that the Commission could not be expected to comment on previous national legislation, as this was outside its Treaty obligations. Members of the committee drew the strong inference from Commissioner Bolkestein's remarks that previous UK legislation with regard to Lloyd's of London did not meet the requirements of EU legislation.

If the UK government fails to respond satisfactorily to the second letter of formal notice, Mr Perry is considering calling upon Parliament to set up a Committee of Inquiry covering the issues raised in his report - namely all aspects of the application of the Insurance Directives with respect to Lloyd's from 1973 to 1995.

Mr Perry's draft report is on the agenda for the March plenary session in Strasbourg.

22.01.2003 Committee on Petitions
       In the chair: Vitaliano GEMELLI (EPP-ED, I)

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