Draft Legislative Reform Order to modernise Lloyd's laid before Parliament

On 17 July 2008, HM Treasury (HMT) announced that the Government had laid a draft Legislative Reform Order (LRO) before Parliament. The LRO (The Legislative Reform (Lloyd's) Order 2008) amends the Lloyd's Act 1982 (1982 Act) to implement reforms to the Lloyd's of London (Lloyd's) market. The amendments complement the Government-supported reforms currently being pursued by Lloyd's.

HMT launched a consultation on its proposed reforms in March 2008 (see Legal update, HMT consults on modernising Lloyd's of London).

HMT's consultation closed on 30 May 2008 and HMT has now published a summary of responses, together with the explanatory document presented to Parliament along with the draft LRO.

The draft LRO provides for eight amendments to the 1982 Act:

Six governance reforms, intended to remove restrictions and administrative burdens principally affecting the operation of the Council of Lloyds.

Two market-related reforms, intended to remove:

- the restriction requiring business at Lloyd's generally to be accepted only from a Lloyd's broker; and

- the "divestment" provisions, which prohibit certain associations between Lloyd's brokers and managing agents in order to manage conflicts of interest.

The Society of Lloyd's held an EGM on 21 May 2008 at which members voted on a resolution to support HMT's proposed reforms. On a capacity weighted basis, 99.14% of members voted in favour of the reforms.

The draft LRO will now be considered by Parliament in accordance with the procedures in the Legislative and Regulatory Reform Act 2006.