Premium Trust Deeds (Hansard, 2 March 1995)

§ Mr. Heseltine

On 8 February the council of Lloyd's sought my approval for certain variations and amendments to the premiums trust deeds, as announced to members of Lloyd's in the chairman's letter of 3 February. It first notified me of the draft proposals last October, and the proposals were subsequently refined.

I have considered this request carefully in accordance with my responsibilities for policyholder protection under the Insurance Companies Act 1982, and in particular section 83(2).

I have concluded that the variations and amendments proposed, and thus the deeds in their amended form, maintain and enhance the protection offered to policyholders. They therefore continue to meet the requirements for my approval under section 83(2), and thus for the continued exemption of members of Lloyd's from regulation under part II of the Act.

The council of Lloyd's has consulted the members of Lloyd's about the proposals, and considered the results of that consultation prior to seeking approval, as announced in the chairman's letter of 3 February.

I am aware that arguments have been raised as to whether clause 22 of the premiums trust deeds empowers the council of Lloyd's to make the proposed variations and amendments. It is not part of my function to adjudicate between the council and members of Lloyd's on that issue, which is governed by private law. In that connection, I note the provision in the proposals put to me to test the validity of the proposed variations and amendments in the courts, and to hold any moneys affected in a suitably secure form to ensure that affected members of Lloyd's will not have their rights prejudiced, pending the outcome of the proceedings. Were the court to find any or all of the variations and amendments invalid, my approval extends to the remainder of them, or the premiums trust deeds in their current form, as appropriate.

I have also considered whether any arguments based on EC law, of the kind raised in the Clementson case, could be directed at these amendments. My legal advice is that the EC arguments raised in that case are unlikely to succeed. Nevertheless, I have received an undertaking from Lloyd's which will have the effect that, pending a determination of those arguments by the courts, recoveries which are attracted by the amendments will not be called into the central fund without my consent.

On this basis, I have therefore notified the council of Lloyd's of my approval of the variations and amendments proposed.