The draft Legislative Reform (Lloyd's) Order 2008 was laid before Parliament on 17 July 2008. The draft Order proposes a number of reforms in the governance of Lloyd's together with changes in certain restrictions on the operation of the Lloyd's insurance market. HM Treasury has recommended that the draft Order be proceeded with under the affirmative resolution procedure.
The timing with which this particular Order falls for our consideration is noteworthy in that the regulation of financial bodies is currently a matter of extensive discussion. Our assessment of the Order is based entirely on the merits of the proposed six governance reforms and two market-related reforms contained therein. These are specific to Lloyd's and have no direct connection with present conditions in financial markets. Should any draft legislative reform orders designed to improve the regulation of financial bodies be laid, we would, of course, deal with them expeditiously.
We have considered the relevant tests in the Legislative and Regulatory Reform Act 2006 and have carefully reviewed the consultation documents and submissions relating to the proposal. On balance, we believe that the proposed reforms will be beneficial and that the proposed replacement regulatory safeguards are adequate. The governance reforms are consistent with moves toward better governance and are balanced with appropriate safeguards. Of the two market reforms, we welcome the replacement of the divestment provisions, which can be circumvented, with better forms of safeguard, subject to there being early review of the effectiveness of the replacement safeguards. The other market reformremoval of the monopoly of Lloyd's brokers on broking businessis a deregulation measure that received a majority of support during consultation, including from the body representing Lloyd's brokers themselves.
We therefore agree that the affirmative resolution procedure is appropriate and recommend that the draft Order be approved.