LLD Lloyd's

LLD 1

Society's regulatory functions

LLD 1.1

Application and purpose

01/12/2004

Application

LLD 1.1.1

The guidance in this chapter is relevant to the Society.

01/12/2004

Purpose

LLD 1.1.2

The guidance in this chapter is intended to:

(1) promote confidence in the market at Lloyd's by ensuring that it is appropriately and effectively regulated by the Society and the Council and those to whom the Council delegates the Society's regulatory functions;
(2) protect policyholders and members; and
(3) enable the FSA to use its resources in an efficient and effective way when regulating underwriting agents, and approved persons acting for or on behalf of those agents, by making it possible for the FSA to rely on the Society and the Council to carry out certain functions on behalf of the FSA or otherwise.

01/12/2004

LLD 1.2

Carrying out the Society's regulatory functions

01/12/2004

Delegation

LLD 1.2.1

The Society should establish and maintain a clear, appropriate and effective delegation of responsibilities for the carrying out of the Society's regulatory functions, so that the Council can adequately monitor and control them.

16/12/2004

LLD 1.2.2

The Council should:

(1) approve and record the delegation referred to in LLD 1.2.1 G; and
(2) review it at least once each year.

01/12/2004

LLD 1.2.3

The terms and limits of any delegation of authority referred to in LLD 1.2.1 G should be made clear to those to whom that authority is delegated.

01/12/2004

LLD 1.2.4

Any committee to which the Society delegates authority under LLD 1.2.1 G should:

(1) have formal terms of reference;
(2) make and retain proper records, including minutes of its meetings; and
(3) be composed of an appropriate number of individuals who are collectively and individually fit and proper.

01/12/2004

LLD 1.2.5

Any individual or other person to whom the Society delegates authority under LLD 1.2.1 G should:

(1) have a written statement of the scope of his delegated authority and the purpose for which it is to be exercised;
(2) make and retain proper records of the exercise of his delegated authority; and
(3) be fit and proper.

01/12/2004

Disciplinary arrangements

LLD 1.2.6

The Society's disciplinary arrangements, including the activities of its disciplinary and appeal committees, should ensure a prompt, fair and independent hearing for any person accused of breaching a byelaw, as required by the Human Rights Act 1998.

01/12/2004

Dealing with the FSA

LLD 1.2.7

In addition to complying with Principle 11 in carrying on its regulated activities, the Society should deal with the FSA in an open and co-operative way in carrying out the Society's regulatory functions and should tell the FSA promptly of anything relating to the FSA's regulatory functions about which it would reasonably expect prompt notice.

16/12/2004

LLD 1.2.8

The Society should ensure that the FSA is able to interview or otherwise obtain information directly from the committees, individuals or other persons to whom the Society delegates responsibility for carrying out the Society's regulatory functions.

16/12/2004

LLD 1.2.9

The access described in LLD 1.2.8 G should include appropriate access to the records of the committees, individuals or other persons who carry out the Society's regulatory functions.

16/12/2004

LLD 1.3

Conflicts of interest

01/12/2004

Arrangements

LLD 1.3.1

The Society should establish and maintain appropriate and effective arrangements to ensure that the carrying out of the Society's regulatory functions is not subject to any improper influence or appearance of improper influence.

16/12/2004

LLD 1.3.2

The arrangements referred to in LLD 1.3.1 G should extend to conflicts of interest that arise for employees of the Society, members of the Council, and others who may be involved in carrying out the Society's regulatory functions.

16/12/2004

LLD 1.3.3

In LLD 1.3 "conflicts of interest" include the appearance of a conflict of interest as well as an actual conflict of interest.

16/12/2004

LLD 1.3.4

The Society should structure itself and delegate authority so that it can continue properly to carry out the Society's regulatory functions despite any conflicts of interest.

16/12/2004

LLD 1.3.5

Matters that the Society should consider under LLD 1.3.4 G include, but are not limited to:

(1) the size and composition of any committees to which authority to carry out the Society's regulatory functions has been or will be delegated; and
(2) the necessity to transfer authority to take decisions or responsibilities to alternates should a conflict of interest arise.

16/12/2004

Guidelines

LLD 1.3.6

The Society should issue guidelines setting out how conflicts of interest are to be handled and where necessary requirements should be imposed to ensure that the guidelines are followed.

16/12/2004

LLD 1.3.7

The guidelines or requirements referred to in LLD 1.3.6 G may be contained, for example, in contracts of employment, staff rules, letters of appointment, or codes of conduct for members of the Council and of those committees to which authority to carry out the Society's regulatory functions has been delegated.

16/12/2004

LLD 1.3.8

The guidelines referred to in LLD 1.3.6 G should include:

(1) guidelines for determining whether a conflict of interest exists;
(2) the need for prompt disclosure of any conflict of interest to enable others, not affected by the conflict, to decide how it should be managed;
(3) guidelines for declaring any conflict of interest at proceedings of the Council and any committees to which the Council delegates responsibility for carrying out the Society's regulatory functions;
(4) the circumstances in which a general advance disclosure of any conflicts of interest will usually be sufficient;
(5) the circumstances in which a general advance disclosure may not be sufficient;
(6) the circumstances in which it may be appropriate for a conflicted individual to withdraw from involvement in the matter concerned without disclosing the interest;
(7) the circumstances in which individuals should withdraw from the decision-making process, from access to relevant information, or from proceedings of the Council or of any committees to which authority to carry out the Society's regulatory functions has been delegated by the Council; and
(8) the penalty or other sanction that will apply if guidelines are not followed or requirements are not complied with.

16/12/2004

LLD 1.3.9

The Society should establish and maintain appropriate and effective arrangements to monitor compliance with the guidelines or requirements referred to in LLD 1.3.6 G by its staff and other persons involved in carrying out the Society's regulatory functions.

16/12/2004

Register and records

LLD 1.3.10

The Society should:

(1) make and retain a register of interests; and
(2) make and retain records of disclosures of conflicts of interest and the steps taken to handle them.

01/12/2004

LLD 1.4

Confidential regulatory information

01/12/2004

LLD 1.4.1

The Society should establish and maintain appropriate and effective arrangements to ensure that confidential regulatory information received or created by the Society is used only for carrying out the Society's regulatory functions and is subject to appropriate and effective restrictions limiting disclosure and use.

16/12/2004

Export chapter as

Legal Instruments that change this Chapter Society's regulatory functions

LLD 2

Provision of information

LLD 2.1

Application and purpose

01/12/2004

Application

LLD 2.1.1

This chapter applies to the Society and the directions in it are given to the Council and to the Society acting through the Council.

01/12/2004

Purpose

LLD 2.1.2

The directions in this chapter are given under section 318 of the Act (Exercise of powers through Council), for the purpose of achieving the objective specified, as required by section 318(2) of the Act, in LLD 2.2.1 D.

01/12/2004

LLD 2.2

Specification of objective

01/12/2004

LLD 2.2.1

The directions and guidance in this chapter are given in relation to the exercise of the powers of the Society and of the Council generally, with a view to achieving the objective of enabling the FSA to:

(1) comply with its general duty under section 314 of the Act (Authority's general duty);
(2) determine whether underwriting agents, or approved persons acting for them or on their behalf, are complying with the requirements imposed on them by or under the Act;
(3) enforce the provisions of the Act, or requirements made under the Act, by enabling the FSA to consider, where appropriate, whether it should use its powers, for example, to:

(a) vary or cancel the permission of an underwriting agent, under section 45 of the Act (Variation etc on the Authority's own initiative);
(b) withdraw approval from an approved person acting for or on behalf of an underwriting agent, under section 63 of the Act (Withdrawal of approval) (see ENF 7);
(c) prohibit an individual acting for or on behalf of an underwriting agent from involvement in regulated activities, under section 56 of the Act (Prohibition orders) (see ENF 8);
(d) require an underwriting agent to make restitution, under section 384 of the Act (Power of Authority to require restitution) (see ENF 9);
(e) discipline an underwriting agent, or an approved person acting for it or on its behalf, for a breach of a requirement made under the Act, including the Principles, Statements of Principle and rules (see ENF 11, ENF 12 and ENF 13);
(f) apply to court for an injunction, restitution order or insolvency order (see ENF 6, ENF 9 and ENF 10); and
(g) prosecute any criminal offence that the FSA has power to prosecute under the Act (see ENF 15).

01/12/2004

LLD 2.2.2

Information provided to the FSA by the Society to comply with the Act, requirements under the Act or rules, may also be used by the FSA for the purposes stated in LLD 2.2.1 D.

01/12/2004

LLD 2.2.3

Other sections of LLD covering the provision of information to the FSA are:

(1) LLD 3.3 (Information about the Central Fund);
(2) LLD 4.3 (Information about the capacity transfer market);
(3) LLD 7.4 (Information about complaints); and
(4) LLD 15 (Reporting by the Society).

01/12/2004

LLD 2.3

Information on matters likely to be of material concern to the FSA

01/12/2004

LLD 2.3.1

The Society must immediately inform the FSA in writing if it becomes aware that any matter likely to be of material concern to the FSA may have arisen in relation to:

(1) the regulated activities for which the Society has permission; or
(2) underwriting agents; or
(3) approved persons or individuals acting for or on behalf of underwriting agents.

01/12/2004

LLD 2.3.2

LLD 2.3.1 D is designed to enable the FSA to fulfil its monitoring and enforcement obligations under paragraph 6 of Schedule 1 to the Act (The Financial Services Authority), whilst at the same time recognising the Society's powers and responsibilities for supervising and regulating the market.

01/12/2004

LLD 2.3.3

In view of the Society's responsibilities for the Society's regulatory functions, the FSA's monitoring of underwriting agents, and approved persons acting for them or on their behalf, may be less intensive than its monitoring of firms and approved persons outside the Lloyd's market. The purpose of LLD 2.3.1 D is to ensure that the Society informs the FSA when it becomes aware, as a result of carrying out the Society's regulatory functions, of matters likely to be of material concern to the FSA.

01/12/2004

LLD 2.3.4

Matters likely to be of material concern to the FSA include but are not limited to:

(1) facts suggesting that an underwriting agent may no longer satisfy the threshold conditions in relation to a regulated activity for which it has a Part IV permission;
(2) facts suggesting that an underwriting agent may have contravened, is contravening, or is likely to contravene, a requirement imposed on it by or under the Act;
(3) facts suggesting that the interests of consumers are or may be at risk;
(4) facts suggesting that an approved person acting for or on behalf of an underwriting agent may not be fit and proper to carry out the functions to which the approval relates;
(5) facts suggesting that an approved person, or individual acting for or on behalf of an underwriting agent, may not be fit and proper to perform functions in relation to a regulated activity carried on by a firm or exempt person;
(6) facts suggesting that an approved person acting for or on behalf of an underwriting agent may have failed to comply with a Statement of Principle, or may have been concerned in the contravention by an underwriting agent of a requirement imposed on it by or under the Act; and
(7) facts suggesting that a person may have committed a criminal offence that the FSA has power to prosecute under the Act and that came to the Society's notice in the course of its regulated activities or the Society's regulatory functions.

01/12/2004

LLD 2.4

Information on investigations and disciplinary proceedings

01/12/2004

LLD 2.4.1

The Society must inform the FSA if it commences investigations or disciplinary proceedings relating to apparent breaches:

(1) of the Act or requirements made under the Act, including the threshold conditions or the Principles or other rules, by an underwriting agent; or
(2) of the Statements of Principle by an individual or other person who carries out controlled functions for or on behalf of an underwriting agent.

01/12/2004

LLD 2.4.2

The Society must inform the FSA if it commences investigations or disciplinary proceedings which do not fall within the scope of LLD 2.4.1 D but which:

(1) involve an underwriting agent, or an approved person who carries out controlled functions for it or on its behalf; or
(2) may indicate that an individual acting for or on behalf of an underwriting agent may not be a fit and proper person to perform functions in relation to regulated activities.

01/12/2004

LLD 2.4.3

The information provided under LLD 2.4.1 D and LLD 2.4.2 D should include information about any:

(1) commencement of an inquiry under Lloyd's Inquiries and Investigations Byelaw (No 3 of 1983);
(2) issue of proceedings under Lloyd's Issue of Proceedings by Council Byelaw (No 18 of 1983);
(3) administrative suspension under Lloyd's Administrative Suspension Byelaw (No 7 of 1987);
(4) making of a review order under Lloyd's Review Powers Byelaw (No 5 of 1986);
(5) imposition of penalties under Lloyd's Misconduct and Penalties Byelaw (No 30 of 1996);
(6) directions given under Lloyd's Suspension: Supplementary and Consequential Matters Byelaw (No 19 of 1983);
(7) institution of disciplinary proceedings, settlement of disciplinary proceedings, or decisions of a Disciplinary Tribunal under Lloyd's Disciplinary Committees Byelaw (No 31 of 1996); and
(8) restitution ordered under Lloyd's Restitution Orders Byelaw (No 24 of 2000).

01/12/2004

LLD 2.4.4

The Society need not give the FSA notice of routine inspections which form part of regular monitoring or themed visits.

01/12/2004

LLD 2.4.5

At the end of each calendar month, the Society should report to the FSA on the progress of all investigations and disciplinary proceedings previously reported under LLD 2.4.1 D and LLD 2.4.2 D that are still in progress or which ceased during that month.

01/12/2004

LLD 2.4.6

The Society should send the FSA the information under LLD 2.4.1 D, LLD 2.4.2 D and LLD 2.4.5 G within five business days of the end of each calendar month.

01/12/2004

LLD 2.5

Co-operation between the FSA and the Society

01/12/2004

LLD 2.5.1

LLD 2.5.2 G sets out the FSA's policy regarding notification to the Society when the FSA investigates or takes action in relation to an underwriting agent, an approved person who carries out controlled functions for or on behalf of an underwriting agent, or an individual acting for or on behalf of an underwriting agent.

01/12/2004

LLD 2.5.2

Subject to the restrictions on disclosure or use of confidential information in or under sections 348 (Restrictions on disclosure of confidential information by Authority etc) and 349 (Exceptions from section 348) of the Act, any restrictions on disclosure or use that apply under European or common law, and any special circumstances of an individual case, the FSA will notify the Society when the FSA does any of the following:

(1) requires, or authorises an officer to require, an underwriting agent to provide specified information or documents under section 165 of the Act (Authority's power to require information); or

(2) requires an underwriting agent to provide a report by a skilled person under section 166 of the Act (Reports by skilled persons); or

(3) appoints an investigator to carry out an investigation under any of sections 167 to 169 of the Act (Appointment of persons to carry out general investigations, Appointment of persons to carry out investigations in particular cases, Investigations etc in support of overseas regulator) where the subject of the investigation is an underwriting agent or an approved person acting for or on behalf of an underwriting agent; or

(4) executes a warrant to search for and to seize documents where the subject of the investigation is an underwriting agent or an approved person acting for or on behalf of an underwriting agent; or

(5) issues a supervisory notice, a warning notice, a decision notice, a notice of discontinuance or a final notice in relation to the following administrative enforcement action against an underwriting agent:

(a) variation or cancellation of permission on the FSA's own initiative under sections 45 to 47 of the Act (Variation etc at request of authorised person, Variation of permission on acquisition of control, Exercise of power in support of overseas regulator); or

(b) restitution required by the FSA under section 384 of the Act (Power of Authority to require restitution); or

(c) disciplinary action under sections 205 and 206 of the Act (Public censure, Financial penalties); or

(6) issues a warning notice, a decision notice, a notice of discontinuance or a final notice in relation to the following administrative enforcement action against an approved person acting for or on behalf of an underwriting agent:

(a) withdrawal of approval under section 63 of the Act (Withdrawal of approval); or

(b) prohibition from regulated activities under section 56 of the Act (Prohibition orders); or

(c) disciplinary action under section 66 of the Act (Disciplinary powers); or

(7) issues a warning notice, a decision notice, a notice of discontinuance or a final notice in relation to the prohibition from regulated activities under section 56 of the Act (Prohibition orders) of an individual acting for or on behalf of an underwriting agent; or

(8) applies to the court for an injunction under section 380 (Injunctions) or restitution order under section 382 (Restitution orders) of the Act in relation to an underwriting agent or an approved person acting for or on behalf of an underwriting agent, or for an administration order, winding up order or bankruptcy order against an underwriting agent under Part XXIV of the Act (Insolvency); or

(9) commences a criminal prosecution against an underwriting agent or approved person acting for or on behalf of an underwriting agent.

01/12/2004

LLD 2.5.3

ENF 11 gives further guidance on the policy and procedures which apply in circumstances where both the FSA and other regulatory authorities have an interest in investigating or disciplining a firm, individual or other person. The FSA and the Society have agreed to have enforcement co-operation arrangements to assist them when they are considering cases of regulatory concern or misconduct of mutual interest.

01/12/2004

LLD 2.6

Information about the Society's byelaws

01/12/2004

LLD 2.6.1

The defined term "byelaw" means any byelaw, direction, regulation, or other instrument made using the powers of the Council under section 6 of Lloyd's Act 1982 (including any regulation ratified by the Council by special resolution) and any condition or requirement made under any such Byelaw, direction, regulation, or other instrument.

16/12/2004

LLD 2.6.2

The Society should give the FSA adequate notice of all changes it proposes to make to its byelaws for supervising and regulating the market at Lloyd's.

16/12/2004

LLD 2.6.3

The Society should, having regard to the materiality and urgency of a proposed change, consult interested parties on changes it proposes to make to its byelaws for supervising and regulating the market at Lloyd's. It should inform the FSA about the consultation undertaken and summarise the responses received.

16/12/2004

LLD 2.6.4

The Society should give the FSA copies of all its regulatory and market bulletins and all amendments to its byelaws as soon as it publishes them.

16/12/2004

Export chapter as

Legal Instruments that change this Chapter Provision of information

LLD 3

The Central Fund

LLD 3.1

Application, purpose and enabling provision

01/12/2004

Application

LLD 3.1.1

This chapter applies to the Society.

01/12/2004

LLD 3.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

01/12/2004

Purpose

LLD 3.1.3

The rules and guidance in this chapter are intended to promote confidence in the market at Lloyd's, and to protect certain consumers of services provided by the Society in carrying on, or in connection with or for the purposes of, its regulated activities. They do this by:

(1) giving guidance to the Society about the protection that the Central Fund should provide for policyholders; and
(2) enabling the FSA to keep under review the protection the Central Fund provides for policyholders.

01/12/2004

Enabling Provision

LLD 3.1.4

The directions in this chapter are given under section 318 of the Act (Exercise of powers through Council) for the purpose of achieving the objective specified, as required by section 318(2) of the Act.

15/10/2003

LLD 3.1.5

The directions given in this chapter are given in relation to the exercise of the powers by the Society in respect of the Central Fund and are given with a view to achieving the objective of ensuring that the Society in making payments or in providing any other financial assistance from the Central Fund does so on a basis which takes no account of amounts of compensation which policyholders may receive under the provisions of the compensation scheme in respect of protected claims against members.

15/10/2003

LLD 3.2

The Central Fund

01/12/2004

LLD 3.2.1

The Society should seek to ensure that the Central Fund provides protection for policyholders so as to minimise the need for Lloyd's policyholders to have recourse to the compensation scheme.

15/10/2003

LLD 3.2.2

The Society should seek, and take appropriate account of, the FSA's views on all proposed changes in its arrangements relating to the Central Fund.

01/12/2004

LLD 3.2.3

The Society must, in the exercise of its powers to make payments from the Central Fund or to provide other forms of financial assistance from the Central Fund, ensure that in calculating and determining the amount of any such payment or the amount of any other financial assistance, it takes no account of the amounts of compensation which policyholders may receive under the provisions of the compensation scheme in respect of protected claims against members.

15/10/2003

LLD 3.3

Information about the Central Fund

01/12/2004

LLD 3.3.1

The Society must give the FSA a report on the Central Fund as at the end of each calendar quarter.

01/12/2004

LLD 3.3.2

The report referred to in LLD 3.3.1 R must reach the FSA within two weeks of the end of each calendar quarter and must include information on:

(1) the net market value of the Central Fund;
(2) payments made from the Central Fund in that quarter;
(3) the types of investment in which the Central Fund is held;
(4) the commencement or cessation of, or any changes in the terms of, any insurance policy taken out to protect the Central Fund; and
(5) any claim made, or circumstances notified that are likely to lead to a claim, under any insurance policy taken out to protect the Central Fund.

01/12/2004

LLD 3.3.3

Because of the significance of the Central Fund in the protection of policyholders, the Society should notify the FSA under LLD 3.3.2 R (5) of all matters relevant to any actual or potential claim. These include but are not limited to the facts on which that claim is based, the circumstances under which those facts arose and any relevant response to the claim from any insurer or reinsurer concerned.

01/12/2004

LLD 3.3.4

The report referred to in LLD 3.3.1 R must be submitted in writing in accordance with SUP 16.3.7 to SUP 16.3.10 (see SUP 16.3.6).

15/10/2003

Export chapter as

Legal Instruments that change this Chapter The Central Fund

LLD 4

Capacity transfer market

LLD 4.1

Application and purpose

01/12/2004

Application

LLD 4.1.1

This chapter applies to the Society.

01/12/2004

LLD 4.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

01/12/2004

Purpose

LLD 4.1.3

The rules and guidance in this chapter are intended to promote confidence in the market at Lloyd's, and to protect certain consumers of services provided by the Society in carrying on, or in connection with or for the purposes of, its regulated activities. They do this by ensuring that the Society appropriately and effectively regulates the capacity transfer market so that it operates in a fair and transparent manner.

01/12/2004

LLD 4.2

Requirement to make byelaws governing conduct in the capacity transfer market

01/12/2004

Requirement

LLD 4.2.1

The Society must make appropriate byelaws governing conduct in the capacity transfer market.

01/12/2004

Standards expected

LLD 4.2.2

The byelaws referred to in LLD 4.2.1 R should:

(1) ensure that adequate and effective arrangements are in place to enable members and persons applying to be admitted as members to enter into transactions to transfer syndicate capacity and settle these transactions in a timely manner;
(2) give clear and comprehensive guidance about the dissemination of information that is, or may be, relevant to the price of syndicate capacity and the transparency of the capacity transfer market; and
(3) prohibit unfair and abusive practices (including market manipulation), the misuse of information not generally available, and the dissemination of false or misleading information.

01/12/2004

LLD 4.2.3

The Society should have adequate and effective arrangements to:

(1) record and monitor transactions in the capacity transfer market, and maintain adequate audit trails; and

(2) suspend or annul transactions where appropriate.

01/12/2004

LLD 4.2.4

The Society should have adequate and effective arrangements to monitor and enforce compliance with the byelaws referred to in LLD 4.2.1 R.

01/12/2004

LLD 4.2.5

The Society should regularly review the byelaws referred to in LLD 4.2.1R, taking account of the standards of conduct required in other UK financial markets.

01/12/2004

LLD 4.2.6

The Society's arrangements for reviewing and amending the byelaws referred to in LLD 4.2.1 R should be timely, effective and impartial and should take into account the guidance about conflicts of interest in LLD 1.3.

01/12/2004

LLD 4.2.7

The Society should consult members and underwriting agents before it finalises material changes in the byelaws referred to in LLD 4.2.1 R, and should have timely and effective arrangements for notifying them of changes in these byelaws.

01/12/2004

Changes in byelaws

LLD 4.2.8

The Society should give the FSA adequate notice of all changes it proposes to make in its byelaws governing conduct in the capacity transfer market.

01/12/2004

LLD 4.2.9

The FSA will take account of the standards of conduct required in other UK financial markets when it reviews proposed changes in the Society's byelaws governing the capacity transfer market.

01/12/2004

LLD 4.3

Information about the capacity transfer market

01/12/2004

LLD 4.3.1

The Society must give the FSA a report as at the end of each calendar quarter in which any capacity is transferred.

01/12/2004

LLD 4.3.2

The report referred to in LLD 4.3.1 R must reach the FSA within one month of the end of the relevant calendar quarter and must include information on:

(1) the total capacity in syndicates transferred during the quarter, analysed by syndicate and method of transfer;

(2) the number, and nature, of all investigations by the Society into conduct in the capacity transfer market undertaken or continued during the quarter; and

(3) the number, and nature, of all complaints received during the quarter about the operation of the capacity transfer market.

01/12/2004

LLD 4.3.3

The report referred to in LLD 4.3.1 R must be submitted in writing in accordance with SUP 16.3.7 to SUP 16.3.10 (see SUP 16.3.6).

18/04/2002

Export chapter as

Legal Instruments that change this Chapter Capacity transfer market

LLD 5

Former underwriting members

LLD 5.1

Application and purpose

01/12/2004

Application

LLD 5.1.1

This chapter applies to the Society.

01/12/2004

LLD 5.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

01/12/2004

Purpose

LLD 5.1.3

The rules and guidance in this chapter are intended to promote confidence in the market at Lloyd's and to protect certain consumers of services provided by the Society in carrying on or in connection with or for the purposes of its regulated activities by:

(1) protecting policyholders against the risk that former underwriting members may not be able to meet any liabilities to carry out contracts of insurance that they underwrote at Lloyd's; and

(2) enabling the FSA to impose requirements under section 320(3) of the Act (Former underwriting members) if it considers this appropriate to protect policyholders.

01/12/2004

LLD 5.2

Requirements relating to former underwriting members

01/12/2004

LLD 5.2.1

The Society must draw sections 320 to 322 of the Act (Former underwriting members, Requirements imposed under section 320, Rules applicable to former underwriting members) to the attention of any person ceasing to be an underwriting member on or after commencement.

01/12/2004

LLD 5.2.2

The Society must require any person, other than a body corporate, ceasing to be an underwriting member on or after commencement to:

(1) notify the Society of any change in his address within one month of the change; and

(2) in the case of a natural person, to make arrangements for the Society to be notified in the event of his death.

01/12/2004

LLD 5.2.3

The Society should make and retain records of the notifications made to it under the requirements referred to in LLD 5.2.2 R. It should give the FSA access to these records if the FSA requests this.

01/12/2004

Export chapter as

Legal Instruments that change this Chapter Former underwriting members

LLD 6

Complaints
from policyholders

LLD 6.1

Enabling provision, application and purpose

01/12/2004

Enabling provision and application

LLD 6.1.1

The insurance market direction in this chapter is given under section 316(1) of the Act (Direction by Authority) and applies to members.

01/12/2004

Purpose

LLD 6.1.2

The insurance market direction given in this chapter is intended to protect the interests of policyholders and potential policyholders by:

(1) making members subject to the Compulsory Jurisdiction of the Financial Ombudsman Service with respect to the carrying on of insurance business; and

(2) enabling the complaints of policyholders who are eligible complainants to be dealt with under the rules of the Financial Ombudsman Service.

01/12/2004

LLD 6.2

Insurance market direction on policyholder complaints

01/12/2004

LLD 6.2.1

(1) With effect from commencement, Part XVI of the Act (The Ombudsman Scheme), and in particular section 226 (Compulsory jurisdiction), applies to the carrying on of insurance business by members.

(2) For the purposes of (1) 'insurance business' means the regulated activities of effecting or carrying out contracts of insurance written at Lloyd's.

01/12/2004

LLD 6.2.2

Part XVI (The Ombudsman Scheme) is a core provision mentioned in section 317(1) of the Act (The core provisions).

01/12/2004

LLD 6.2.3

Section 317(2) of the Act (The core provisions) provides that references in an applied core provision to an authorised person are to be read as references to a person in the class to which the insurance market direction applies. The effect of this, and of the insurance market direction set out at LLD 6.2.1 D, is that Part XVI of the Act (The Ombudsman Scheme), and in particular section 226 (Compulsory jurisdiction), apply also to members.

01/12/2004

LLD 6.2.4

Guidance on the jurisdiction of the Financial Ombudsman Service in relation to members is given in DISP 2.5.3 G. The handling of a policyholder complaint against a member is covered in DISP 1.7.1 R and DISP 1.7.2 R.

01/12/2004

Export chapter as

Legal Instruments that change this Chapter Complaints from policyholders

LLD 7

Complaints
from members

LLD 7.1

Application and purpose

01/12/2004

Application

LLD 7.1.1

This chapter applies to the Society.

01/12/2004

LLD 7.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

01/12/2004

Purpose

LLD 7.1.3

The rules and guidance in this chapter are intended to promote confidence in the market at Lloyd's, and to protect certain consumers of services provided by the Society in carrying on, or in connection with or for the purposes of, its regulated activities. They do this by ensuring that there are adequate and effective arrangements to handle and resolve complaints from members about the conduct of certain activities within the Lloyd's market by the Society or by underwriting agents.

01/12/2004

LLD 7.1.4

The Financial Ombudsman Service will not be able to deal with these complaints and separate rules and guidance are therefore required.

01/12/2004

LLD 7.1.5

Complaints from policyholders, and complaints from members about members' advisers, are dealt with in LLD 6, DISP 1.7 and DISP 2.5.3 G.

01/12/2004

LLD 7.2

Complaints handling arrangements

01/12/2004

LLD 7.2.1

The Society must establish and maintain appropriate and effective arrangements for handling any complaint from a member or a former member about:

(1) regulated activities carried on by the Society;

(2) the Society's regulatory functions carried on by the Society, the Council or those to whom the Council delegates authority to carry out such functions;

(3) advice given by an underwriting agent to a person to become, continue or cease to be, a member of a particular syndicate; and

(4) the management by a managing agent of the underwriting capacity of a syndicate on which the complainant participates or has participated.

01/12/2004

LLD 7.2.2

In establishing the arrangements referred to in LLD 7.2.1 R the Society should have regard to:

(1) the likely number of complaints it will receive; and

(2) the nature and complexity of the complaints it is likely to receive and investigate.

01/12/2004

LLD 7.2.3

The arrangements referred to in LLD 7.2.1 R should have the following features.

(1) They should allow for complaints to be made by any reasonable means.

(2) The complaints handling policy and arrangements should be published and be made available to members, former members and underwriting agents.

(3) Copies of the documents referred to in (2) should be sent to a complainant as soon as a complaint is received.

(4) The Society should ensure that its employees and those of underwriting agents are aware of the complaints handling policy and arrangements, and should endeavour to ensure that they act in accordance with them.

(5) All complaints should be investigated promptly and wherever possible provision should be made for review of that investigation by someone who was not involved in the matter complained of.

(6) Appropriate management controls should be put in place to ensure that complaints are handled fairly, impartially and consistently and that recurring or systemic problems can be identified and remedied.

(7) Complaints should be resolved speedily at the earliest stage possible.

(8) If a complaint cannot be resolved speedily, a letter of acknowledgement should be sent promptly, indicating when the complainant can expect a substantive response.

(9) All responses to complaints should adequately address the subject matter of the complaint.

01/12/2004

LLD 7.2.4

A response to a complaint should be sent within four weeks of its receipt. This should:

(1) accept the complaint and where appropriate offer redress (financial or otherwise); or

(2) reject the complaint and give reasons for doing so; or

(3) explain that it has not yet been possible to resolve the complaint and that more time is needed to do so, giving reasons for the delay and stating when a further response will be made.

01/12/2004

LLD 7.2.5

If a complaint has not been resolved within eight weeks from the date on which the Society received it, the complainant should be told that more time is needed and reasons for the delay should be given, with a date when the complainant will get a further response.

01/12/2004

LLD 7.2.6

At the end of the eight week period referred to in LLD 7.2.5 G, or at the time it sends a substantive response (if this is earlier), the Society should also send the complainant information on:

(1) any right to refer the complaint:

(a) to the Lloyd's Members' Ombudsman if the complaint relates to the matters identified in LLD 7.2.1 R (1) or LLD 7.2.1 R (2); or

(b) to the Lloyd's Arbitration Scheme if the complaint relates to the matters identified in LLD 7.2.1 R (3) or LLD 7.2.1 R (4); or

(c) to any other independent dispute resolution scheme that may, pursuant to LLD 7.5.1 R, replace either of the schemes referred to in (a) and (b); and

(2) arrangements and procedures for referring the complaint.

01/12/2004

LLD 7.2.7

Any redress accepted by a complainant should be provided promptly.

01/12/2004

LLD 7.2.8

Where financial redress is appropriate, the aim should be to return the complainant to the position he would have been in had the acts or omissions giving rise to the complaint not occurred.

01/12/2004

LLD 7.2.9

The redress referred to in LLD 7.2.8 G should include a reasonable rate of interest on sums to which the complainant would have been entitled but for the acts or omissions in question.

01/12/2004

LLD 7.2.10

All correspondence and literature about the Society's handling of complaints should be in plain language.

01/12/2004

LLD 7.3

Making and retaining records of complaints

01/12/2004

LLD 7.3.1

The Society should make records relating to complaints from members and former members involving allegations that the complainants have suffered, or may suffer, financial loss, material distress or material inconvenience.

01/12/2004

LLD 7.3.2

The records created under LLD 7.3.1 G should be retained for a minimum period of three years from the date of receipt of a complaint.

01/12/2004

LLD 7.4

Information about complaints

01/12/2004

LLD 7.4.1

Within one month of the periods ending June and December in each calendar year, the Society should give the FSA a report containing the following information:

(1) the number of complaints received from members and former members during that period involving allegations that the complainants have suffered, or may suffer, financial loss, material distress or material inconvenience;

(2) a summary of the nature of these complaints;

(3) the number of these complaints resolved or rejected;

(4) the amount of money paid to each complainant referred to in (1) as redress and any other form of redress made; and

(5) the number of these complaints which have been referred to the Lloyd's Arbitration Scheme, the Lloyd's Members' Ombudsman or any other independent dispute resolution scheme that may replace either of these schemes.

01/12/2004

LLD 7.4.2

For the purposes of the report referred to in LLD 7.4.1 G, "complaints resolved" include complaints where the Society has completed its consideration of the complaint and either knows the complaint has been resolved to the complainant's satisfaction or has no reason to suspect otherwise.

01/12/2004

LLD 7.5

Independent dispute resolution schemes

01/12/2004

LLD 7.5.1

The Society must maintain by byelaw one or more appropriate and effective schemes for the resolution of disputes between an individual member or a former member who was an individual member and:

(1) his underwriting agent; or

(2) the Society.

01/12/2004

LLD 7.5.2

For the purposes of LLD 7.5.1 R "individual member" includes a member which is a limited liability partnership or a body corporate whose members consist only of, or of the nominees for, a single natural person or a group of connected natural persons.

01/12/2004

LLD 7.5.3

The schemes to which LLD 7.5.1 R currently refers are the Lloyd's Arbitration Scheme and the Lloyd's Members' Ombudsman respectively, but the Society may maintain other independent dispute resolution schemes in addition to, or instead of, either of these schemes.

01/12/2004

LLD 7.5.4

The schemes referred to in LLD 7.5.1 R should be operationally independent of the Society.

01/12/2004

LLD 7.5.5

An individual member or former member who was an individual member should not have access to the schemes referred to in LLD 7.5.1 R unless the complaints arrangements maintained by the Society have failed to resolve the complaint to his satisfaction within eight weeks of receiving it.

01/12/2004

LLD 7.5.6

The Society should give the FSA adequate notice of all proposed changes to the byelaws relating to the schemes referred to in LLD 7.5.1 R.

01/12/2004

LLD 7.5.7

When considering what is required to ensure the operational independence of the schemes referred to in LLD 7.5.1 R, or proposed changes in such schemes, the Society should take account of similar arrangements operated by the Financial Ombudsman Service.

01/12/2004

Export chapter as

Legal Instruments that change this Chapter Complaints from members

LLD 8

Compensation
arrangements for individual members

LLD 8.1

Application and purpose

01/12/2004

Application

LLD 8.1.1

This chapter applies to the Society.

01/12/2004

LLD 8.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

01/12/2004

Purpose

LLD 8.1.3

The rules and guidance in this chapter are intended to promote confidence in the market at Lloyd's, and to protect consumers of certain services provided by the Society in carrying on, or in connection with or for the purposes of, its regulated activities. They do this by ensuring that the Society continues to maintain adequate and effective compensation arrangements for individual members and former members who were individual members in respect of claims against underwriting agents (other than claims for losses arising only from underwriting or investment risk).

01/12/2004

LLD 8.1.4

The compensation scheme will not compensate members or former members if firms are unable to satisfy claims made in connection with regulated activities relating to their participation in Lloyd's syndicates. Separate rules and guidance are therefore required.

01/12/2004

LLD 8.2

Compensation arrangements for individual members

01/12/2004

LLD 8.2.1

The Society must maintain byelaws establishing appropriate and effective arrangements to compensate individual members and former members who were individual members if underwriting agents are unable, or likely to be unable, to satisfy claims by those members relating to regulated activities carried on in connection with their participation in Lloyd's syndicates.

01/12/2004

LLD 8.2.2

For the purposes of LLD 8.2.1 R "individual member" includes a member which is a limited liability partnership or a body corporate whose members consist only of, or of the nominees for, a single natural person or a group of connected natural persons.

01/12/2004

LLD 8.2.3

The arrangements referred to in LLD 8.2.1 R:

(1) will not compensate losses arising only as a result of underwriting or investment risk to which individual members or former members who were individual members are or were exposed by their participation in Lloyd's syndicates;

(2) may be restricted to compensation for losses arising out of fraud, dishonesty or failure to account; and

(3) should cover all regulated activities carried on by underwriting agents relating to Lloyd's syndicate capacity and syndicate membership.

01/12/2004

LLD 8.2.4

The arrangements referred to in LLD 8.2.1 R should have a governance structure that is operationally independent from the Society, but which is nevertheless accountable to the Society for the proper administration of the compensation arrangements.

01/12/2004

LLD 8.2.5

If the Society proposes to extend the scope of the losses covered by the arrangements referred to in LLD 8.2.1 R (beyond those resulting from fraud, dishonesty or failure to account), it should have regard to the types of losses covered by the compensation scheme.

01/12/2004

LLD 8.2.6

In setting the limit of compensation payable for a single loss, and whatever co-insurance should apply, the Society should have regard to the compensation payable by the compensation scheme for similar claims relating to similar regulated activities.

01/12/2004

LLD 8.2.7

The Society should consult interested parties on proposed changes in the byelaws establishing the arrangements referred to in LLD 8.2.1 R.

01/12/2004

LLD 8.2.8

The Society should give the FSA adequate notice of all changes it proposes to make to the byelaws establishing the arrangements referred to in LLD 8.2.1 R.

01/12/2004

Export chapter as

Legal Instruments that change this Chapter Compensation arrangements for individual members

LLD 8A

Compensations arrangements for policyholders

LLD 8A.1

Enabling provision, application and purpose.

01/12/2004

Enabling provision and application

LLD 8A.1.1

The insurance market direction in this chapter is given under section 316(1) of the Act (Direction by Authority) and applies to members.

15/10/2003

Purpose

LLD 8A.1.2

The insurance market direction in this chapter is intended to protect the interests of policyholders and potential policyholders by:

(1) providing for the application of the compensation scheme in respect of contracts of insurance issued by members; and

(2) providing for the application of such other provisions of the Act as will enable the application of the compensation scheme to be effective in relation to insurance market activities carried on by members.

15/10/2003

LLD 8A.2

Insurance market direction on policyholder compensation.

01/12/2004

LLD 8A.2.1

With effect from 15 October 2003 the following core provisions of the Act apply to the carrying on of insurance market activities by members:

(1) Part X (Rules and guidance) for the purpose of applying the rules in COMP and relevant interpretative provisions; and

(2) Part XV (Financial Services Compensation Scheme).

15/10/2003

LLD 8A.2.2

Section 317(2) of the Act (The core provisions) provides that references in an applied core provision to an authorised person are to be read as references to a person in the class to which the insurance market direction applies. In particular, with effect from 15 October 2003, references to a relevant person in Part XV of the Act include a person who was a member at the time the act or omission giving rise to the claim against him took place.

15/10/2003

Export chapter as

Legal Instruments that change this Chapter Compensations arrangements for policyholders

LLD 9

Prudential
requirements for the Society

LLD 9.1

Application and purpose

01/12/2004

Application

LLD 9.1.1

This chapter applies to the Society.

01/12/2004

LLD 9.1.2

This chapter applies substantially the same requirements to the Society as IPRU(INS) applies to insurers.

01/12/2004

LLD 9.1.3

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

01/12/2004

Purpose

LLD 9.1.4

The purpose of this chapter and LLD 10 to LLD 15 is to:

(1) protect policyholders against the risk that the Society and members may not have adequate financial resources to meet claims as they fall due;

(2) promote confidence in the market at Lloyd's by requiring the Society, and through it members, to maintain resources which are adequate to meet their liabilities;

(3) promote confidence in the market at Lloyd's and enhance public awareness by improving the transparency of financial reporting by the Society; and

(4) protect the interests of consumers of insurance business at Lloyd's.

01/12/2004

LLD 9.1.5

This chapter sets out high level prudential requirements relating to insurance business at Lloyd's.

01/12/2004

LLD 9.2

General prudential requirements

01/12/2004

LLD 9.2.1

The Society must manage its affairs, including the exercise of its byelaw-making powers, with due regard to the interests of policyholders and potential policyholders.

01/12/2004

LLD 9.2.2

The Society must ensure that its affairs are soundly and prudently managed and take reasonable steps to ensure that the Lloyd's market is soundly and prudently managed.

01/12/2004

LLD 9.2.3

The Society must adopt the standards of due care and diligence set out in the custody rules at CASS 2 in relation to the custody of assets that constitute members' funds.

01/01/2004

LLD 9.2.4

The Society may not permit any syndicate to carry on both long-term insurance business and general insurance business.

01/12/2004

LLD 9.2.5

The Society must, having regard to the availability and value of the central assets of the Society, ensure that its assets and its members' assets are adequate to meet the liabilities which members assume in their insurance business at Lloyd's.

01/12/2004

LLD 9.2.6

The Society must:

(1) ensure that its admissible assets:

(a) that are investments are diversified and adequately spread; and

(b) taking into account the risks posed to the Society by its activities and by the insurance business carried on by members, are of appropriate safety, yield, maturity and marketability; and

(2) take reasonable steps to ensure that the admissible assets of members:

(a) which are investments are diversified and adequately spread; and

(b) taking into account the type of insurance business carried on by members, are of appropriate safety, yield, maturity and marketability.

01/12/2004

LLD 9.3

General guidance on financial resources

01/12/2004

LLD 9.3.1

LLD 9 to LLD 15 are concerned with the adequacy of the financial resources of the Society and members, which may be threatened by the inherent uncertainties of insurance business.

01/12/2004

LLD 9.3.2

These uncertainties include:

(1) uncertainty about the amount of claims and expenses;

(2) uncertainty about the timing of claims and expenses, which may result in assets not being realisable at full value, or at all, when they are needed to pay claims and expenses;

(3) the risk that non-insurance liabilities may deplete available assets;

(4) the risk of adverse movements in the value of, or income from, general or specific assets including fluctuations in interest and foreign exchange rates which may result in a fall in value of the assets held by the Society and by its members; and

(5) the risk of default by counterparties.

01/12/2004

LLD 9.3.3

These inherent uncertainties apply both to existing contracts of insurance and prospectively to planned new business. In addition members are subject to operational risks that impact upon the adequacy of provisions established for past business, the premiums charged for new business and the funds held to support both past and new business.

01/12/2004

LLD 9.3.4

LLD 9 to LLD 15 address the significant business risks faced by members. They are designed to ensure that the business of the Lloyd's market is properly managed and has in place the controls needed to safeguard policyholders' interests.

01/12/2004

LLD 9.3.5

The central prudential safeguard is for the Society to maintain sufficient net assets to cover any shortfall in members' resources. Detailed rules and guidance on this subject are contained in LLD 11 (Required margins of solvency).

01/12/2004

LLD 9.3.6

The requirement to maintain sufficient assets to cover any shortfall in members' resources is underpinned by a standard approach to the valuation and recognition of the assets and liabilities of the Society and its members. Requirements are made in LLD 10 to LLD 14 which set out:

(1) the types of asset which can count towards meeting solvency obligations, any limits on the value which can be placed on an asset, and admissibility limits on the amount of exposure to any one counterparty;

(2) how insurance and other liabilities should be determined; and

(3) requirements that an actuary certify the adequacy of reserves set.

01/12/2004

LLD 9.3.7

For the purpose of calculating solvency in accordance with LLD 9 to LLD 15, the other personal wealth of members is left out of account.

01/12/2004

LLD 9.3.8

The Society is required to prepare and submit an audited annual return which reports on assets and liabilities and includes a statement that any shortfall in members' resources has been covered. The requirements for reporting are in LLD 15 (Reporting by the Society).

01/12/2004

LLD 9.3.9

Requirements in relation to valuation and reporting are supplemented by requirements to hold assets that adequately match the risks posed by estimated liabilities. These requirements are contained in LLD 14 (Assets: market and credit risk).

01/12/2004

LLD 9.3.10

LLD 10 (Insurance operational risk) includes rules requiring premiums and other assets to be held in suitable trust arrangements to provide policyholders with additional safeguards. LLD 10 (Insurance operational risk) also includes requirements on the Society to assess the risks posed to the Society by the business underwritten by each member and to set capital requirements accordingly.

01/12/2004

LLD 9.4

Accounting principles and records

01/12/2004

Accounting principles

LLD 9.4.1

The Society must, for the purposes of LLD 9 to LLD 15, apply the insurance accounts rules and generally accepted accounting practice, adapted where necessary to apply to the special circumstances of Lloyd's, unless the provisions of this sourcebook otherwise require.

01/12/2004

LLD 9.4.2

An important source of such accounting practice is the Statement of Recommended Practice on Accounting for Insurance Business, as issued in December 1998 by the Association of British Insurers and endorsed by the Accounting Standards Board.

01/12/2004

LLD 9.4.3

Assets are subject to the valuation and admissibility provisions of LLD 13 (Assets: valuation and realisability risk) and LLD 14 (Assets: market and credit risk) and may in the Lloyd's Return and for other reporting purposes have attributed to them a lesser value than would be the case under generally accepted accounting practice.

01/12/2004

LLD 9.4.4

Liabilities are subject to the valuation and admissibility provisions of LLD 12 (Determination of liabilities) and may in the Lloyd's Return and for other reporting purposes have attributed to them a greater value than would be the case under generally accepted accounting practice.

01/12/2004

Records

LLD 9.4.5

The Society must make and maintain for an appropriate period adequate accounting records in the United Kingdom.

01/12/2004

LLD 9.4.6

LLD 9.4.5 R refers only to those accounting records appropriate to demonstrate compliance by the Society with the reporting requirements of LLD 9 to LLD 15.

01/12/2004

LLD 9.4.7

An appropriate period for the purposes of LLD 9.4.5 R would normally be not less than 10 years.

01/12/2004

Export chapter as

Legal Instruments that change this Chapter Prudential requirements for the Society

LLD 11

Required margins of solvency

LLD 11.1

Application and purpose

01/12/2004

Application

LLD 11.1.1

This chapter applies to the Society.

01/12/2004

LLD 11.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

01/12/2004

Purpose

LLD 11.1.3

This chapter imposes on the Society solvency requirements that have a similar effect on Lloyd's as a whole to those imposed on insurers. The solvency requirements for insurers are set out in IPRU(INS) 2 (Margins of solvency) (see also LLD 9.1.4 G).

01/12/2004

LLD 11.1.4

Members are not responsible for meeting the liabilities of other members, so the Society needs to calculate solvency requirements (the required amount) attributable to each member's insurance business. LLD 11.2.1 R provides that, where a member's assets are insufficient to cover his required amount, any shortfall must be covered by net central assets of the Society.

01/12/2004

LLD 11.1.5

However, especially for general insurance business, the requirements of this chapter should be regarded as the minimum. They do not relieve the Society of the requirement to assess the actual risks arising from its activities and the insurance business carried on at Lloyd's by its members and to ensure the adequacy of the assets and other resources available to support those risks.

01/12/2004

LLD 11.1.6

In accordance with Principle 11 (Relations with regulators), LLD 11.2.4 R requires the Society to inform the FSA if the solvency requirement of LLD 11.2.1 R is or is likely to have been breached. Likewise LLD 11.2.11 R requires the Society to inform the FSA if a criterion similar to the guarantee fund requirement for insurers is or is likely to have been breached.

01/12/2004

LLD 11.1.7

The rules in this chapter implement the Solvency 1 Directives (2002/12/EC and 2002/13/EC) in respect of Lloyd's.

01/01/2004

LLD 11.2

Solvency requirement

01/12/2004

LLD 11.2.-2

If IPRU(INS) 2.4(6) operates to increase the Society margin, the Society may attribute all or part of that increase to a member by increasing that member's required amount, as provided for in LLD 11.2.6 R.

01/01/2004

LLD 11.2.-1

If the Society relies on LLD 11.2.-2 R to attribute any part of the increase in the Society margin to a member, it must establish and use a reasonable and transparent methodology for making that attribution.

01/01/2004

LLD 11.2.1

The Society must maintain available net central assets which are adequate to cover the aggregate of:

(1) for each member, the amount by which his general insurance business assets are less than the required amount calculated under LLD 11.2.6 R;

(2) for each member, the amount by which his long-term insurance business assets are less than the required amount calculated under LLD 11.2.7 R;

(3) the amount by which the Society margin, less any increase resulting from the operation of IPRU(INS) 2.4(6), exceeds the sum for all members of the members' margins for general insurance business;

(4) the excess (if any) of 3,000,000 Euros (using the conversion rate notified by the FSA from time to time for this purpose) over the sum for all members of the members' margins for long-term insurance business; and

(5) the amount of any increase in the Society margin resulting from the operation of IPRU(INS) 2.4(6) that is not attributed to a member or members under LLD 11.2.-2 R.

01/01/2004

LLD 11.2.2

Where an asset is held as part of funds at Lloyd's and is available to meet the liabilities of more than one member (interavailable funds), the Society may, as it considers appropriate, allocate that asset (net of any attaching liability) between those members for the purpose of LLD 11.2.1 R.

01/12/2004

LLD 11.2.3

LLD 11.2.1 R is the central financial requirement placed on the Society. The Society will need to perform an assessment of the financial position of each member, to the extent necessary to confirm continuing compliance with LLD 11.2.1 R. It will need to have sufficient funds centrally to cover the total of:

(1) any shortfall in the assets of members when, individually, their assets are less than the sum of their liabilities and a member's margin, calculated according to formulae set out in LLD 11.3.1 R and LLD 11.3.4 R;

(2) any adjustment required of the Society when the total of members' margins is less than the result would have been had the Society been treated as a single insurer and applied the relevant solvency test to itself; and

(3) any amount of the increase in the Society margin resulting from the operation of IPRU(INS) 2.4(6) that the Society does not or cannot attribute to a member or members, by increasing the required amounts of those members under LLD 11.2.-2 R.

01/01/2004

LLD 11.2.4

The Society must inform the FSA promptly if:

(1) its net central assets fall below the amount required under LLD 11.2.1 R; or

(2) it cannot confirm that it has maintained the net central assets required under LLD 11.2.1 R.

01/12/2004

LLD 11.2.5

If the Society fails to maintain the net central assets required under LLD 11.2.1 R, the FSA would expect to require the Society to prepare and submit a plan for the restoration of a sound financial position similar to that required from insurers by SUP App 2, and other remedies might also apply, including the FSA's exercise of its own-initiative power under section 45 of the Act (Variation etc. on the Authority's own initiative).

01/12/2004

LLD 11.2.6

For each member, the required amount for general insurance business is the aggregate of:

(1) his general insurance business liabilities;

(2) the member's margin for general insurance business, calculated under LLD 11.3.1 R and

(3) any amount attributed to that member under LLD 11.2.-2 R.

01/01/2004

LLD 11.2.7

For each member, the required amount for long-term insurance business is the aggregate of:

(1) his long-term insurance business liabilities; and

(2) the member's margin for long-term insurance business, calculated under LLD 11.3.4 R.

01/12/2004

LLD 11.2.8

The member's margin and the Society margin (together with the requirement for the Society to maintain net central assets to cover any shortfalls) are similar to the required minimum margin for insurers.

01/12/2004

LLD 11.2.9

The required minimum margin for an insurer contains within it a further threshold, that assets must exceed liabilities by the guarantee fund. If this requirement is not met, further regulatory actions are triggered. The guarantee fund for an insurer is an amount which is calculated as one third of the required minimum margin(or the minimum guarantee fund if greater).

01/12/2004

LLD 11.2.10

A similar test for the Society is whether it maintains net central assets to meet the criterion of LLD 11.2.11 R.

01/12/2004

LLD 11.2.11

The Society must inform the FSA promptly if its net central assets are, or are likely to be, inadequate to cover the aggregate of:

(1) for each member, the amount by which his general insurance business assets are less than the lower required amount calculated under LLD 11.2.13 R;

(2) for each member, the amount by which his long-term insurance business assets are less than the lower required amount calculated under LLD 11.2.14 R;

(3) the amount by which the Society guarantee fund, less any increase resulting from the operation of IPRU(INS) 2.4(6), exceeds one-third of the sum for all members of the members' margins for general insurance business;

(4) the excess (if any) of 3,000,000 Euros over one-third of the sum for all members of the members' margins for long-term insurance business.

(5) one-third of the amount of any increase in the Society margin resulting from the operation of IPRU(INS) 2.4(6) that is not attributed to a member under LLD 11.2.-2 R.

01/01/2004

LLD 11.2.12

If the Society fails to meet this criterion, the FSA would expect to require the Society to prepare and submit a short-term financial scheme similar to that required from insurers by SUP App 21.4, and other remedies might also apply, including the FSA's exercise of its own-initiative power under section 45 of the Act (Variation etc. on the Authority's own initiative).

01/01/2004

LLD 11.2.13

For each member, the lower required amount for general insurance business is the aggregate of:

(1) his general insurance business liabilities;

(2) one-third of the member's margin for general insurance business, calculated under LLD 11.3.1 R; and

(3) one-third of any amount attributed to that member under LLD 11.2.-2 R.

01/01/2004

LLD 11.2.14

For each member, the lower required amount for long-term insurance business is the aggregate of:

(1) his long-term insurance business liabilities; and

(2) one-third of the member's margin for long-term insurance business, calculated under LLD 11.3.4 R.

01/01/2004

LLD 11.2.15

(1) Subject to (2) and (3), the base amount, in Euro, specified in LLD 11.2.1 R (4) and LLD 11.2.11 R (4) will increase each year, starting on the first review date of 20 September 2003 (and annually after that), by the percentage change in the European index of consumer prices (comprising all EU member states as published by Eurostat) from 20 March 2002 to the relevant review date, rounded up to a multiple of 100,000 Euro.

(2) In any year, if the percentage change since the last increase is less than 5%,then there will be no increase.

(3) The increase will take effect 30 days after the EU Commission has informed the European Parliament and Council of its review and the relevant percentage change.

01/01/2004

LLD 11.2.16

Where the nature or quality of reinsurance relied on to reduce the member's margin for general insurance business for any member or members changes significantly during the financial year, the Society must notify the FSA forthwith of the change.

01/01/2004

LLD 11.2.17

To the extent that an asset is valued at market value, and there has been a significant decrease in the market value since the end of the prior financial year, the Society must notify the FSA forthwith of the change.

01/01/2004

LLD 11.3

Member's margin

01/12/2004

General insurance business

LLD 11.3.1

A member's margin for general insurance business is the higher of the amounts determined under:

(1) LLD 11.4.8 R (the premiums basis); and

(2) LLD 11.4.13 R and LLD 11.4.16 R (the claims basis);

multiplied by the netting-down percentage (to allow for reinsurance) determined under LLD 11.4.20 R.

01/12/2004

LLD 11.3.2

The member's margin applying throughout a financial year depends on premiums receivable during the previous financial year or claims incurred during the three previous financial years, multiplied in each case by a ratio derived primarily from claims incurred in the previous three financial years.

01/01/2004

LLD 11.3.3

LLD 15 (Reporting by the Society) requires the annual returns to reflect the solvency requirements applicable to the following financial year in the statement of the financial position as at the end of a financial year.

01/12/2004

Long-term insurance business

LLD 11.3.4

A member's margin for long-term insurance business is the required margin of solvency which would apply to the member for his long-term insurance business if the member were an insurer and that requirement were modified as in LLD 11.3.6 R.

01/12/2004

LLD 11.3.5

IPRU(INS) 2 (Margins of solvency) specifies the margins of solvency which an insurer must maintain.

01/12/2004

LLD 11.3.6

Mathematical reserves (both before and after deduction of reinsurance cessions) and capital at risk must be calculated as if every reinsurance to close were a transfer of engagements.

01/12/2004

LLD 11.3.7

The purpose of LLD 11.3.6 R is to ensure that each member's margin applicable to a financial year is calculated by reference to his participation as at the start of the financial year.

01/12/2004

LLD 11.3.8

As supplementary sickness and accident insurance business is not written as part of any long-term insurance contract at Lloyd's, this chapter does not include solvency requirements for that business.

01/12/2004

LLD 11.4

General insurance

01/12/2004

Provisions common to the premiums and claims bases

LLD 11.4.1

In LLD 11.4.8 R and LLD 11.4.13 R, actuarial health insurance means general insurance business which is sickness insurance and satisfies the following conditions:

(1) the gross premiums receivable are calculated on the basis of sickness tables appropriate to insurance business;

(2) the reserves include provision for increasing age;

(3) an additional premium is collected in order to set up appropriate additional prudential provisions;

(4) it is not possible for the member or syndicate to cancel the contract after the end of the third year of insurance; and

(5) the contract provides for the possibility of increasing premiums or reducing benefits during its currency.

01/12/2004

LLD 11.4.2

In LLD 11.4.8 R, LLD 11.4.13 R and LLD 11.4.19 R, the member's share of premiums receivable and claims incurred:

(1) excludes amounts in respect of syndicate years which have been closed into open syndicate years in which the member did not participate at the end of the previous financial year; but

(2) includes amounts, determined under LLD 11.4.4 R, in respect of syndicate years which have been closed into open syndicate years in which the member participated at the end of the previous financial year.

01/12/2004

LLD 11.4.3

The member's share includes amounts in respect of open syndicate years in which the member participated at the end of the previous financial year.

01/12/2004

LLD 11.4.4

In LLD 11.4.2 R the member's share for a closed syndicate year must be determined by reference to the member's participation in the open syndicate year into which it has been closed.

01/12/2004

LLD 11.4.5

LLD 11.4.4 R establishes the principle that a member's share of premiums and claims is determined according to the member's participation in the open syndicate year into which the closed syndicate year has been closed. Therefore any participation the member had in the closed syndicate year (or any other syndicate year into which it was previously closed) should not be used. This applies whenever amounts were receivable, paid, outstanding or recoverable, and to whatever date they relate.

01/12/2004

LLD 11.4.6

In determining for each member the amount of general insurance business premiums receivable in a period for the purposes of LLD 11.4.8 R and LLD 11.4.11 R, premiums under contracts of reinsurance accepted shall be included, but amounts receivable under contracts of reinsurance to close accepted shall be excluded.

01/12/2004

LLD 11.4.7

Subject to LLD 11.4.2 R, LLD 11.4.4 R and LLD 11.4.6 R, the amounts of premiums and claims should be determined in accordance with the accounting principles and rules contained in the insurance accounts rules and generally accepted accounting practice. They should therefore exclude amounts arising from contracts, regardless of their legal form, that do not fall to be classified as insurance or reinsurance under generally accepted accounting practice.

01/12/2004

Premiums basis

LLD 11.4.8

Subject to LLD 11.4.2 R, LLD 11.4.6 R and LLD 11.4.9 G, for each member the premiums basis referred to in LLD 11.3.1 R is his share of the general insurance business premiums receivable (or one-third of his share for actuarial health insurance) in the previous financial year multiplied by 16% of the factor determined under LLD 11.4.11 R. For each member, his share of the general insurance business premiums is either his share calculated for general insurance business premiums earned, or that calculated for general insurance business premiums receivable, whichever is the higher.

01/01/2004

LLD 11.4.9

For the purpose of calculating each member's share of general insurance business premiums under LLD 11.4.8 R, premiums in respect of classes 11, 12 and 13 of general insurance business (see Annex 11.2 of IPRU(INS)) must be increased by 50% for both general insurance business premiums earned and general insurance business premiums receivable. Statistical methods may be used to allocate the premiums in respect of these classes.

01/01/2004

LLD 11.4.10

In setting the premium basis at 16% of premiums in the year (and one-third of this for actuarial health insurance), LLD 11.4.8 R is similar to the corresponding calculation for insurers. Liabilities subjected to reinsurance to close are treated as having been written originally by members of the accepting syndicate year, rather than of the ceding syndicate year.

01/12/2004

LLD 11.4.11

The factor referred to in LLD 11.4.8 R is the ratio for all members taken together of general insurance business premiums receivable in the previous financial year net of inter-syndicate reinsurance premiums, to those premiums before deducting inter-syndicate reinsurance premiums.

01/12/2004

LLD 11.4.12

Adjustments are made for inter-syndicate reinsurance on an approximate basis to enable Lloyd's as a whole to avoid double-counting part of the margin.

01/12/2004

Claims basis

LLD 11.4.13

Subject to LLD 11.4.13A R for each member, the claims basis referred to in LLD 11.3.1 R is his share, determined under LLD 11.4.2 R, of the general insurance business claims incurred (or one-third of his share in the case of actuarial health insurance) in the three previous financial years divided by three and multiplied by 23% of the factor determined under LLD 11.4.17 R.

01/01/2004

LLD 11.4.13A

For the purposes of LLD 11.4.13 R claims, provisions and recoveries in respect of classes 11, 12 and 13 of general insurance business (see Annex 11.2 of IPRU(INS)) must be increased by 50%. Statistical methods may be used to allocate the claims, provisions and recoveries in respect of these classes.

01/01/2004

LLD 11.4.14

LLD 11.4.4 R and LLD 11.4.6 R apply to the determination of claims incurred.

01/12/2004

LLD 11.4.15

In setting the claims basis at 23% of the annual average of claims incurred in the three year period (and one-third of this for actuarial health insurance), LLD 11.4.13 R is similar to the corresponding calculation for insurers. Liabilities subjected to reinsurance to close are treated as having been written originally by members of the accepting syndicate year, rather than the ceding syndicate year.

01/12/2004

LLD 11.4.16

For a member, the claims basis referred to in LLD 11.3.1 R is nil if:

(1) every open syndicate year in which the member participated at the end of the previous financial year; and

(2) every other syndicate year which has been closed into any such open syndicate year;

commenced after the start of the third last previous financial year.

01/12/2004

LLD 11.4.17

The factor referred to in LLD 11.4.13 R is the ratio for all members taken together of general insurance business claims paid in the three previous financial years net of inter-syndicate reinsurance recoveries, to those claims before deducting inter-syndicate reinsurance recoveries.

01/12/2004

LLD 11.4.18

Adjustments are made for inter-syndicate reinsurance on an approximate basis to enable Lloyd's as a whole to avoid double-counting part of the margin.

01/12/2004

Factor to net down for reinsurance

LLD 11.4.19

For the purposes of LLD 11.4.20 R and subject to LLD 11.4.2 R, the ratio for each member is the ratio for the three previous financial years of his share of net (of reinsurance) claims incurred to his share of gross claims incurred divided by the factor determined under LLD 11.4.21 R.

01/01/2004

LLD 11.4.20

For each member the netting-down percentage referred to in LLD 11.3.1 R is:

(1) where the ratio determined under LLD 11.4.19 R is greater than 100%, 100%; or

(2) the ratio determined under LLD 11.4.19 R, where it is greater than 50%, but not greater than 100%; or

(3) in any other case, 50%.

01/12/2004

LLD 11.4.21

The factor referred to in LLD 11.4.19 R is the ratio for all members taken together of general insurance business claims paid in the previous financial year net of inter-syndicate reinsurance recoveries, to those claims before deducting inter-syndicate reinsurance recoveries.

01/12/2004

LLD 11.4.22

Adjustments are made for inter-syndicate reinsurance on an approximate basis to enable Lloyd's as a whole to avoid double-counting part of the margin.

01/12/2004

LLD 11.5

Society margin

01/12/2004

LLD 11.5.1

The Society must calculate the required minimum margin it would have to maintain under IPRU(INS) 2 (Margins of solvency) if it were an insurer carrying on all the general insurance business carried on by its members, but eliminating inter-syndicate reinsurance (the Society margin).

01/12/2004

LLD 11.5.2

The Society must calculate the guarantee fund it would have to maintain under IPRU(INS) 2 (Margins of solvency) if it were an insurer carrying on all the general insurance business carried on by its members, but eliminating inter-syndicate reinsurance (the Society guarantee fund).

01/12/2004

LLD 11.5.3

The required minimum margin and the guarantee fund must, under IPRU(INS), at least equal the minimum guarantee fund. So the Society margin and the Society guarantee fund must at least equal the minimum guarantee fund which would apply if the members taken together constituted an insurer, other than a mutual, authorised for all classes of general insurance business carried on at Lloyd's.

01/12/2004

LLD 11.5.4

Appendices 2.1 to 2.3 of IPRU(INS) also set out how the "premium basis", the "claims basis" and the minimum guarantee fund should be calculated for an insurer.

01/12/2004

LLD 11.5.5

For the purpose of LLD 11.5.1 R and LLD 11.5.2 R the Society may make appropriate approximations, taking reasonable care to avoid underestimating the Society margin and the Society guarantee fund.

01/12/2004

Export chapter as

Legal Instruments that change this Chapter Required margins of solvency

LLD 13

Assets: valuation and realisability risk

LLD 13.1

Application and purpose

01/12/2004

Application

LLD 13.1.1

This chapter applies to the Society.

01/12/2004

LLD 13.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

01/12/2004

Purpose

LLD 13.1.3

This chapter sets out the basis on which different assets are to be identified and valued (see also LLD 9.1.4 G).

01/12/2004

LLD 13.1.4

The risks which this chapter in part addresses arise because of:

(1) uncertainty about the time at which claims may fall due; and

(2) difficulties, costs and uncertainty in realising assets earlier than anticipated.

01/12/2004

LLD 13.1.5

LLD 9.2.5 R requires the Society to ensure it and its members maintain adequate assets to meet the liabilities which it assumes and which its members severally assume. LLD 11.2.1 R requires the Society to assess the financial position of each member and to maintain sufficient net central assets to cover at least the total of members' solvency deficits.

01/12/2004

LLD 13.2

Identification and valuation of assets

01/12/2004

LLD 13.2.1

The Society must identify its assets and value them in accordance with this chapter and LLD 14 (Assets: market and credit risk).

01/12/2004

LLD 13.2.2

The Society must take all reasonable steps to ensure the identification and valuation (in accordance with this chapter and LLD 14 (Assets: market and credit risk)) of each member's admissible assets which are available to meet his underwriting liabilities.

01/12/2004

LLD 13.2.3

For the purposes of LLD 13.2.2 R a member's admissible assets which are available to meet his underwriting liabilities include his funds at Lloyd's and his share of premium trust funds, but exclude funds held outside Lloyd's (other personal wealth).

01/12/2004

LLD 13.2.4

For the purposes of LLD 13.2.1 R and LLD 13.2.2 R, assets in respect of long-term insurance business and general insurance business must be separately identified.

01/12/2004

LLD 13.2.5

LLD 9.4.1 R sets out the basic rule under which assets are to be valued for the purpose of calculating solvency, including:

(1) whether, and when, to recognise or ignore an asset; and

(2) which description to place on an asset;

but the application of the basic rule in LLD 9.4.1 R is subject both to this chapter and LLD 14 (Assets: market and credit risk).

01/12/2004

LLD 13.2.6

A lower value than that required by this chapter and LLD 14 (Assets: market and credit risk) (or a nil value) may be attributed to any asset identified under this chapter.

01/12/2004

LLD 13.3

Maturity and marketability of assets

01/12/2004

LLD 13.3.1

LLD 9.2.6 R requires the Society to ensure that its admissible assets, and to take reasonable steps to ensure that members' admissible assets, are of appropriate maturity and marketability. In doing so, the Society should have regard to the expected timing of liabilities (especially policyholder claims) and the need to make a prudent allowance for the risk that liabilities may fall due earlier than expected.

01/12/2004

LLD 13.3.2

In considering whether an allowance should be made for the risk that claims may fall due earlier than expected, the following should be taken into account:

(1) the type of insurance business;

(2) the past history of volatility;

(3) options available to policyholders and the circumstances in which they are likely to exercise them;

(4) options available to the syndicate and any incentive for the syndicate to exercise them;

(5) the other cashflow needs of the syndicate, including the need to fund overseas regulatory requirements; and

(6) the extent to which technical provisions for long-term insurance business are discounted (technical provisions for general insurance business cannot be discounted, under LLD 12.4.8 R).

01/12/2004

LLD 13.3.3

In determining whether assets are of appropriate maturity, marketability and realisability, the following should be taken into account:

(1) the expected date of maturity, redemption, repayment or disposal;

(2) foreseeable potential delays in the date of maturity, redemption, repayment or disposal;

(3) the arrangements necessary to ensure that assets are located in, or transferred to, the appropriate trust fund;

(4) any uncertainty about the value of the asset at its expected date of realisation;

(5) the speed with which assets may be realised earlier if needed;

(6) the loss in value which might occur if assets were realised quickly; and

(7) the amount of any surplus of assets over liabilities.

01/12/2004

LLD 13.3.4

Reliance should not be placed upon expected cash flows from future new insurance business as a means of avoiding the need to hold assets that are appropriately marketable or otherwise realisable.

01/12/2004

LLD 13.4

Admissible assets

01/12/2004

LLD 13.4.1

Assets are admissible for the purposes of LLD 13.2.1 R only if they fall within the description of admissible assets in LLD 13.4.3 R, or are a derivative contract or quasi-derivative contract falling within LLD 13.6.1 R.

01/12/2004

LLD 13.4.2

The list of admissible assets has been drawn up with the aim of excluding assets:

(1) for which there is no sufficiently objective and verifiable basis of valuation; or

(2) whose realisability cannot be relied upon with sufficient confidence; or

(3) whose nature presents an unacceptable custody risk; or

(4) the holding of which may give rise to significant liabilities or onerous duties; or

(5) which give rise to excessive market or counterparty risk (for which see LLD 14 (Assets: market and credit risk)).

01/12/2004

LLD 13.4.3

Description of admissible assets (see LLD 13.4.1 R)

(1) Investments in, and amounts due from disposal of:

(a) debt securities, bonds and other money and capital market instruments; or
(b) loans; or
(c) shares and other variable yield participations; or
(d) units in schemes falling within the UCITS directive and in other collective investment schemes; or
(e) land, buildings and immovable property rights.

(2) Debts and claims that are:

(a) debts owed by reinsurers, including reinsurers' shares of technical provisions; or
(b) deposits with and debts owed by ceding undertakings; or
(c) debts owed by policyholders and intermediaries arising out of direct insurance and reinsurance operations (except where LLD 13.8.7 R applies); or
(d) debts owed by a member to another member of the Society where the debt is a liability arising out of the insurance business he carries on at Lloyd's; or
(e) in respect of general insurance business only, claims arising out of salvage and subrogation; or
(f) tax recoveries; or
(g) claims against guarantee funds.

(3) Other assets which are:

(a) tangible fixed assets, other than land and buildings; or
(b) cash at bank and in hand, deposits with credit institutions and any other bodies permitted to receive deposits; or
(c) deferred acquisition costs; or
(d) accrued interest and rent, other accrued income and prepayments.

(4) In relation to members' funds at Lloyd's, other assets which are:

(a) guarantees and letters of credit issued by credit institutions or by insurance undertakings; or
(b) verifiable sums arising out of life insurance policies.

01/12/2004

LLD 13.5

Restriction of value to realisable amounts

01/12/2004

LLD 13.5.1

The value of assets must be reduced by:

(1) the expenses of realisation, if they were not already deducted in arriving at that value; and

(2) any reduction in value which would occur if the asset needed to be realised at short notice to meet liabilities falling due earlier than expected.

01/12/2004

LLD 13.5.2

Short notice in this context should not normally be taken to be more than 12 months.

01/12/2004

LLD 13.6

Derivatives

01/12/2004

LLD 13.6.1

An asset which is a derivative contract or a quasi-derivative contract is not admissible unless it has a prescribed pricing basis and it is:

(1) held to reduce investment risk or for the purpose of efficient portfolio management;

(2) held in connection with assets falling within the description of an admissible asset in LLD 13.4.3 R;

(3) covered;

(4) capable of being readily closed out; and

(5) based on underlying assets falling within the description of an admissible asset in LLD 13.4.3 R, an index of those assets or an official index of retail prices.

01/12/2004

LLD 13.6.2

Under LLD 13.4.1 R, and for the purposes of LLD 9 to LLD 15, a value may not be attributed to an asset that is not an admissible asset. The list of admissible assets in LLD 13.4.3 R excludes assets that give rise to unacceptable valuation, realisability, liability, market or counterparty risks. LLD 13.6.1 R applies equivalent restrictions to derivative contracts and quasi-derivative contracts. The aim is to reduce the assumption of those risks, especially market risk.

01/12/2004

LLD 13.6.3

A derivative contract or quasi-derivative contract that does not comply with LLD 13.6.1 R is an inadmissible asset. As with other inadmissible assets the Society and its members are not prohibited from holding it provided that no value is attributed to it. In some circumstances a provision may need to be established to protect against the risk of liability from a derivative contract or quasi-derivative contract whether or not it is admissible.

01/12/2004

LLD 13.6.4

Due regard should be paid to guidance note 4.2 (Use of derivative contracts in insurance funds) set out in IPRU(INS).

01/12/2004

LLD 13.7

Stock lending agreements

01/12/2004

LLD 13.7.1

Provided the conditions specified in LLD 13.7.2 R, and either LLD 13.7.5 R or LLD 13.7.6 R (as appropriate), are satisfied, value may be attributed to:

(1) securities sold under a stock lending agreement as if those securities had been retained; and

(2) assets provided for the purchase of securities under that agreement as if consideration had not been provided.

01/12/2004

LLD 13.7.2

Subject to LLD 13.7.3 R and LLD 13.7.4 R, for the purposes of LLD 13.7.1 R the conditions are that:

(1) the securities have been sold to or purchased from an approved credit institution or an approved investment firm; and

(2) that sale or purchase was made subject to an agreement that the approved credit institution or approved investment firm would subsequently, either on demand or within six months of that sale or purchase, sell back or purchase back equivalent securities.

01/12/2004

LLD 13.7.3

Value must not, however, be attributed to:

(1) any consideration received for the sale of securities under a stock lending agreement (or any assets purchased with such consideration) up to the limit of the value of the securities sold; or

(2) any securities purchased under a stock lending agreement (or any assets purchased with the proceeds of the sale of those securities) up to the limit of the consideration provided.

01/12/2004

LLD 13.7.4

Where, at any time after the sale or purchase of securities under a stock lending agreement either:

(1) the amount of the consideration received for sale of the securities falls below the value of the securities sold by more than 2.5%; or

(2) the value of the securities purchased falls below the value of the consideration provided by more than 2.5%;

additional consideration equal to the shortfall must be obtained before the end of the working day following the day when the shortfall occurred.

01/12/2004

LLD 13.7.5

For the purposes of LLD 13.7.1 R, where securities are purchased from an approved credit institution or approved investment firm and the consideration provided is other than by way of sale of the securities, the conditions are that the securities purchased:

(1) are issued by an approved credit institution; and

(2) do not include:

(a) securities (other than approved securities) issued by the same counterparty whose aggregate value amounts to more than 15% of the value of the securities purchased; or

(b) if (a) is not satisfied, securities whose value when aggregated with existing exposure to assets of the same description, or to the same counterparty, would exceed the appropriate permitted asset exposure limit or permitted counterparty exposure limit, as determined under LLD 14 (Assets: market and credit risk).

01/12/2004

LLD 13.7.6

For the purposes of LLD 13.7.1 R, where securities are sold to an approved credit institution or an approved investment firm, the conditions are that:

(1) the consideration provided by the approved credit institution or approved investment firm is:

(a) cash; or

(b) approved securities; or

(c) listed securities; or

(d) securities issued by an approved credit institution; or

(e) a charge over the assets set out in (a) to (d); or

(f) a letter of credit established with an approved credit institution; or

(g) a guarantee provided by an approved credit institution; and

(2) the consideration does not include:

(a) except to the extent that LLD 13.7.6 R (2)(b) is satisfied, an amount which, when aggregated with existing exposure to assets of the appropriate description or to the relevant counterparty, would exceed the appropriate permitted asset exposure limit or permitted counterparty exposure limit, as determined under LLD 14 (Assets: market and credit risk); or

(b) an amount, more than 15% of which takes the form of securities (other than approved securities) issued by, letters of credit established with, guarantees provided by, cash deposited with, a charge over cash deposited with or a charge over securities issued by, the same counterparty; and

(3) the consideration to be provided for the subsequent purchase back of equivalent securities is:

(a) cash denominated in the same currency where the consideration for the original purchase by the approved credit institution or approved investment firm was (wholly or in part) cash; and

(b) equivalent to the securities provided as consideration where the consideration was (wholly or in part) securities.

01/12/2004

LLD 13.7.7

Where a number of stock lending agreements have been entered into, for the purposes of LLD 13.7.5 R and LLD 13.7.6 R:

(1) any or all agreements under which the subsequent sale or purchase has not taken place at the valuation date may be treated as one agreement; and

(2) in such case, the 15% limits in LLD 13.7.5 R (2)(a) and LLD 13.7.6 R (2)(b) must be calculated by reference to the aggregate of the value of the securities purchased under LLD 13.7.5 R or the amount of any consideration in LLD 13.7.6 R.

01/12/2004

LLD 13.7.8

Where consideration has been received for any other sale of the kind described in LLD 13.7.1 R, in addition to any other exposure to assets or to a counterparty:

(1) if the consideration takes the form of a letter of credit established with, or a guarantee provided by, an approved credit institution, then it must be treated as giving rise to exposure to that institution by the amount of the consideration;

(2) if the consideration takes the form of a charge over securities, then it must be considered to give rise to exposure to securities of the same description and to the issuer of those securities by the amount of the consideration; and

(3) if the consideration takes the form of cash deposited with another party for the benefit of the Society or a member, or a charge over cash deposited with another party, then it must be considered to give rise to exposure to that party by the amount of the consideration.

01/12/2004

LLD 13.7.9

In these rules the amount of any consideration must:

(1) in the case of a letter of credit established with an approved credit institution, be the lower of the amount made available under the letter of credit and the value of the assets sold; or

(2) in the case of a guarantee provided by an approved credit institution, be the lower of the amount of the guarantee and the value of the assets sold; or

(3) in the case of assets of the types in LLD 13.7.6 R (1)(a) to LLD 13.7.6 R (1)(d), or a charge over those assets, be the value of the assets as determined under this chapter and LLD 14 (Assets: market and credit risk).

01/12/2004

LLD 13.8

Debts and other rights

01/12/2004

LLD 13.8.1

Subject to LLD 13.8.12 R, the value of an asset that is a secured debt due, or to become due, other than a debt to which LLD 13.8.3 R or LLD 13.8.8 R applies, must:

(1) for a debt which is, or will become, due within 12 months of the valuation date (including any debt which would become due within that period if any right to require payment were to be exercised), be the amount which can reasonably be expected to be recovered for that debt; and

(2) for any other debt, be the amount which would reasonably be paid as consideration for an immediate assignment of the debt.

01/12/2004

LLD 13.8.2

In assessing the value of an asset under LLD 13.8.1 R and LLD 13.8.5 R, due account should be taken of the nature and quality of the security and the terms and conditions for payment.

01/12/2004

LLD 13.8.3

For long-term insurance business, the value of an asset that is a debt due, or to become due, and is secured on a policy of insurance written at Lloyd's and which (together with any other debt secured on that policy) does not exceed the amount payable on a surrender of that policy at the valuation date, must be the amount of that debt.

01/12/2004

LLD 13.8.4

Subject to LLD 13.8.12 R, the value of an asset that is an unsecured debt due, or to become due, other than a debt to which LLD 13.6.1 R, LLD 13.8.5 R, LLD 13.8.7 R or LLD 13.13.1 R applies, must:

(1) in the case of a debt which is, or will become, due within 12 months of the valuation date (including any debt which would become due within that period if any right to require payment were to be exercised), be the amount which can reasonably be expected to be recovered for that debt; and

(2) in the case of any other debt, be the amount which could reasonably be expected to be paid as consideration for an immediate assignment of the debt.

01/12/2004

LLD 13.8.5

Subject to LLD 13.8.6 R, the value of any assets that are rights under a contract of reinsurance must be the amount which can reasonably be expected to be recovered by exercising those rights.

01/12/2004

LLD 13.8.6

LLD 13.8.5 R does not apply to rights under a contract of reinsurance for long-term insurance business except to the extent that debts are due under that contract.

01/12/2004

LLD 13.8.7

Value must not be attributed to any asset that is a debt due, or to become due:

(1) from an intermediary for money advanced on account of commission to which that intermediary is not absolutely entitled at the valuation date; or

(2) in respect of premiums (account having been taken of rebates, refunds and commissions payable) which are recorded in the relevant accounting records as due and payable and has been outstanding for more than three months.

01/12/2004

LLD 13.8.8

For general insurance business, the value of any assets that are subrogation rights must be the amount that can reasonably be expected to be recovered by exercising those rights.

01/12/2004

LLD 13.8.9

For general insurance business, the value of any assets that are salvage rights must be the amount that can reasonably be expected to be recovered by exercising those rights.

01/12/2004

LLD 13.8.10

The value of any asset that is a right to recover assets transferred by way of initial margin must be determined:

(1) where the initial margin was a cash payment, as if a debt were owed for that amount; and

(2) where the initial margin took the form of a transfer of securities, as if a debt were owed of an amount equal to the value of such securities as determined under this chapter and LLD 14 (Assets: market and credit risk).

01/12/2004

LLD 13.8.11

The value of any rights arising from an asset that is a derivative contract to which LLD 13.6.1 R does not apply, or under a quasi-derivative contract to which LLD 13.6.1 R does not apply, must be the value of any right to recover assets transferred as initial margin together with the value of any other unconditional right to receive a specified amount.

01/12/2004

LLD 13.8.12

LLD 13.8.1 R and LLD 13.8.4 R do not apply to any rights (other than debts due) in respect of:

(1) securities or beneficial interests in a limited liability partnership; or

(2) units or other beneficial interests in a collective investment scheme; or

(3) a derivative contract, except to the extent provided under LLD 13.8.10 R or LLD 13.8.11 R; or

(4) a contract or asset which is a quasi-derivative contract except to the extent provided under LLD 13.8.10 R or LLD 13.8.11 R or where a derivative contract asset includes an element of debt.

01/12/2004

LLD 13.9

Land

01/12/2004

LLD 13.9.1

The value of an asset that is land must not be greater than the amount which would be realised (after deduction of reasonable sale expenses) if the land were sold at a price equal to the most recent valuation made by a qualified valuer, which valuation must have been made not more than three years before the end of the relevant syndicate year.

01/12/2004

LLD 13.10

Equipment

01/12/2004

LLD 13.10.1

The value of an asset that is office machinery (other than computer equipment), furniture, motor vehicles and other equipment must, in the syndicate year in which it is purchased, be not greater than one-half of its cost and must be left out of account in any subsequent year.

01/12/2004

LLD 13.10.2

The value of an asset that is computer equipment, including software must:

(1) in the syndicate year in which it is purchased, not be greater than three-quarters of the cost;

(2) in the next syndicate year, not be greater than one-half of the cost;

(3) in the syndicate year after that, not be greater than one-quarter of the cost; and

(4) in any following year, be nil.

01/12/2004

LLD 13.11

Securities and beneficial interests in limited liability partnerships

01/12/2004

LLD 13.11.1

Subject to LLD 13.11.2 R, the value of an asset that is an investment to which this rule applies, must:

(1) where the investment is transferable and LLD 13.11.3 R does not apply, be the market value;

(2) where the investment is transferable and LLD 13.11.3 R applies, be the lower of:

(a) the market value; and

(b) the amount which could reasonably be expected as consideration for an assignment or transfer of the investment at a date not later than 12 months after the valuation date; or

(3) where the investment is not transferable:

(a) be the amount payable on redemption on the valuation date, or on the most recent date before the valuation date when the issuer of the investment could have been required to redeem it; or

(b) where the investment cannot be redeemed, be the amount which would reasonably be paid as consideration for surrendering the interest in the investment.

01/12/2004

LLD 13.11.2

LLD 13.11.1 R applies to the valuation of investments comprising securities (but not those which are derivative contracts, units or other beneficial interests in collective investment schemes or quasi-derivative contracts) and beneficial interests in limited liability partnerships, and, for the purposes of LLD 13.11.5 G, investments includes loans.

01/12/2004

LLD 13.11.3

Subject to LLD 13.11.4 R, for the purposes of LLD 13.11.1 R (1) and LLD 13.11.1 R (2), this rule applies where it is not reasonable to assume that, had negotiations for assigning or transferring the investment started seven working days or less before the valuation date, the investment could have been assigned for an amount not less than 97.5% of the market value, other than to the issuer or to an associate of the issuer.

01/12/2004

LLD 13.11.4

LLD 13.11.3 R does not apply if it would otherwise apply by reason only that:

(1) the listing of the investment has been temporarily suspended after the stock exchange on which the investment is listed or the regulated market on which facilities for dealing have been granted received price sensitive information; or

(2) the extent of the holding would prevent an orderly disposal of the investment for at least 97.5% of the market value.

01/12/2004

LLD 13.11.5

Where more than one unlisted investment is made (other than investments exclusively comprising loans) and their total value is greater than the aggregate of the values of each investment valued separately, then the higher value may be attributed to the investments, if it is reasonable to assume that none of the investments would be assigned or transferred separately.

01/12/2004

LLD 13.12

Collective investment schemes

01/12/2004

LLD 13.12.1

The value of assets that are units or other beneficial interests in a collective investment scheme to which LLD 13.12.2 R applies must:

(1) where the issuer can be required to purchase the units or other beneficial interests from the holder upon the holder giving notice of one month or less, be the price at which the issuer would have purchased the units or other beneficial interests on the valuation date or the most recent date before the valuation date on which it could have been required to make that purchase; or

(2) where the issuer cannot be required to purchase the units or other beneficial interests as set out in LLD 13.12.1 R (1), be a value determined under LLD 13.11.1 R.

01/12/2004

LLD 13.12.2

LLD 13.12.1 R applies to units or other beneficial interests in:

(1) a scheme falling within the UCITS directive; or

(2) an authorised unit trust scheme or a recognised scheme; or

(3) any other collective investment scheme where:

(a) the scheme does not include derivative contracts unless they are contracts to which LLD 13.6.1 R applies;

(b) the scheme does not include quasi-derivative contracts unless they are contracts to which LLD 13.6.1 R applies; and

(c) the scheme does not include assets except those for the valuation of which provision is made in this chapter or LLD 14 (Assets: market and credit risk).

01/12/2004

LLD 13.13

Deferred acquisition costs

01/12/2004

LLD 13.13.1

In the case of general insurance business, the value of an asset that comprises deferred acquisition costs must be the value as determined under LLD 9.4.1 R.

01/12/2004

LLD 13.14

Reversionary interests

01/12/2004

LLD 13.14.1

The value of an asset that is a long-term insurance business asset consisting of an interest in land which is a remainder, reversionary interest, right of fee subject to a life rent or other future interest, whether vested or contingent, must be the amount that can reasonably be expected to be paid as consideration for an immediate transfer or assignment of that intent.

01/12/2004

LLD 13.15

Related and subsidiary undertakings

01/12/2004

LLD 13.15.1

The value of any shares held by the Society in a related undertaking of the Society must not exceed the value, determined in accordance with IPRU(INS) (other than IPRU(INS) 4.14(1)(a) to (c)), of its surplus assets.

01/12/2004

LLD 13.15.2

The surplus assets of a related undertaking are its total assets excluding:

(1) subject to LLD 13.15.4 R, the assets that are selected to cover its liabilities and, in the case of a related undertaking which is an insurance undertaking, to cover the notional required minimum margin;

(2) assets that are interests directly or indirectly held in the related undertaking's own capital (including shares and subordinated debt) or in liabilities of the Society that are subordinated to the interests of policyholders;

(3) where the related undertaking carries on long-term insurance business, profit reserves and future profits;

(4) assets which represent either a long-term insurance business fund or a fund the allocation of which as between policyholders and other purposes has yet to be determined;

(5) amounts due, or to become due, in respect of share capital, or other contributions from members of the related undertaking, subscribed or called for but not fully paid up; and

(6) assets that cannot effectively be made available or realised to meet liabilities of the Society or members, including assets that represent capital not owned, directly or indirectly, by the Society.

01/12/2004

LLD 13.15.3

Examples of assets that may not be effectively available include blocked currency and minority interests which cannot be readily realised.

01/12/2004

LLD 13.15.4

The assets identified in LLD 13.15.2 R (1) to be deducted from the total assets:

(1) where the related undertaking is an insurance undertaking, must be identified and valued in accordance with relevant regulatory requirements as to the value, admissibility, nature, location or matching that apply to the assets available to cover its liabilities and the notional required minimum margin;

(2) where the related undertaking is not an insurance undertaking, must be of a value at least equal to the amount of its liabilities, determining that value and that amount in accordance with IPRU(INS) (other than 4.14(1)(a) to (c)); and

(3) in both cases, must not include:

(a) assets falling within LLD 13.15.2 R (2); or

(b) assets falling within LLD 13.15.2 R (5) where the amount is due, or to become due, from a member, the Society or a related undertaking.

01/12/2004

LLD 13.15.5

Where the relevant regulatory requirements merely identify the categories of assets that are eligible to cover liabilities or represent the notional required minimum margin, the Society may select which assets it actually identifies for these purposes. That selection may take the form of a selection of a pro rata proportion of all eligible assets.

01/12/2004

LLD 13.15.6

Even where the relevant regulatory requirements would allow assets excluded by LLD 13.15.4 R (3) to cover liabilities and represent the notional required minimum margin, those assets should be ignored. Without using assets excluded by LLD 13.15.4 R (3), the assets identified should be sufficient to satisfy the relevant regulatory requirements.

01/12/2004

LLD 13.15.7

Other types of asset, including those excluded from the definition of surplus assets, may be used to cover liabilities and the notional required minimum margin where permitted by the relevant regulatory requirements. Similarly for a non-insurance undertaking a value may be attributed, using the IPRU(INS) rules relating to the valuation of assets, to other types of asset, even where excluded from the definition of surplus assets.

01/12/2004

LLD 13.15.8

For the purposes of LLD 13.15.4 R the relevant regulatory requirements are:

(1) in the case of an insurance undertaking established in a designated State or territory, the regulatory requirements of that State or territory applicable to an undertaking carrying on direct insurance business (even if it is a pure reinsurer); and

(2) in the case of any other insurance undertaking, subject to LLD 13.15.9 R, the rules in IPRU(INS) applicable to an insurer with its head office in the United Kingdom (whether or not it is such an insurer).

01/12/2004

LLD 13.15.9

For the purposes of LLD 13.15.8 R (2):

(1) LLD 2.10 to LLD 2.13 are to be applied as if the insurance undertaking satisfied the condition in LLD 2.10; and

(2) LLD 4.14 (1)(a) to (c) are ignored.

01/12/2004

LLD 13.16

Debts due or to become due from a related undertaking

01/12/2004

LLD 13.16.1

The value of any debt due, or to become due, from a related undertaking must not exceed the amount reasonably expected to be recovered in respect of the debt, taking into account only the value of:

(1) the assets identified under LLD 13.15.2 R (1); and

(2) any security held in respect of the debt.

01/12/2004

Export chapter as

Legal Instruments that change this Chapter Assets: valuation and realisability risk

LLD 14

Assets: market and credit risk

LLD 14.1

Application and purpose

01/12/2004

Application

LLD 14.1.1

This chapter applies to the Society.

01/12/2004

LLD 14.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

01/12/2004

Purpose

LLD 14.1.3

LLD 9.2.5 R requires the Society to ensure that it and its members maintain adequate assets to meet the liabilities that it assumes and which members assume. LLD 11.2.1 R requires the Society to maintain sufficient net central assets to cover the total of solvency deficits of members.

01/12/2004

LLD 14.1.4

The requirements in this chapter address both specific and general market risk. Specific market risk refers to the risk arising from fluctuations in the value of specific assets. General market risk refers to more widespread fluctuations in market values. It includes foreign exchange risk (see also LLD 9.1.4 G).

01/12/2004

LLD 14.2

Limitation of general market risk ' all types

01/12/2004

LLD 14.2.1

A fluctuation in asset values may have an impact upon the value of the Society's own assets and the assets of members and upon the amount of their liabilities. Any of these effects may have an impact on the ability to meet valid claims as they fall due. In many, but not all, cases these effects may offset each other especially where assets are closely matched to the liabilities they cover.

01/12/2004

LLD 14.2.2

The Society should limit this net exposure to specific market risk by requiring a close matching of assets to the liabilities they cover.

01/12/2004

LLD 14.2.3

The Society should take all reasonable steps to ensure that prudent provision is made, or other appropriate measures taken, against the effects of likely future changes in general asset values on:

(1) the ability of members to meet valid claims as they fall due; and

(2) the adequacy of assets to meet those claims.

01/12/2004

LLD 14.3

Currency matching and localisation

01/12/2004

LLD 14.3.1

The Society must take reasonable steps to ensure that members in aggregate comply with the matching rules set out in:

(1) Annex 1 of the Second Non-Life Directive (88/357/EEC) in relation to general insurance business; and

(2) Annex 1 of the Third Life Directive (92/96/EEC) in relation to long-term insurance business;

as if all discretionary powers of the United Kingdom as Member State have been fully exercised in favour of the Society and members. In complying with this rule the Society may exercise, in favour of members, any discretion allowed to the United Kingdom as a Member State under those Directive provisions.

01/12/2004

LLD 14.3.2

LLD 14.3.3 R does not apply to:

(1) insurance business carried on outside the EEA States; or

(2) reinsurance business (unless it is facultative reinsurance).

01/12/2004

LLD 14.3.3

The Society must take reasonable steps to ensure that assets (other than claims against reinsurers) held pursuant to LLD 14.3.1 R in respect of risks situated within the EEA are localised within the EEA, or if they cover liabilities in any currency other than sterling, in any EEA State or the state of that currency.

01/12/2004

LLD 14.3.4

Claims against debtors must be treated as situated in the state where those debts can be liquidated.

01/12/2004

LLD 14.4

Assets to be taken into account only to a specified extent

01/12/2004

LLD 14.4.1

LLD 13 (Assets: valuation and realisability risk) specifies the classes of assets which are admissible assets and valuation rules. LLD 14.5 and LLD 14.6 contain rules which, for certain classes of assets, place limitations on the value which may be attributed to them in the Lloyd's Return and for solvency purposes. So, having identified and valued assets under LLD 13 (Assets: valuation and realisability risk), the aggregate value of those assets both for each member (taking their funds at Lloyd's and share of premium trust fund assets together) and for the Society in both cases will be reduced by an amount representing the total of:

(1) the amount of exposure to assets of any description over the permitted asset exposure limit for assets of that description, as determined under LLD 14.5;

(2) the amount of exposure to a counterparty over the permitted counterparty exposure limit for that counterparty, as determined under LLD 14.6; and

(3) the amount of excess concentration with a number of counterparties, as determined under LLD 14.6.

01/12/2004

LLD 14.4.2

Where a member carrying on long-term insurance business has attributed assets partly to a long-term insurance business fund and partly to other assets, any reduction required to be made under LLD 14.5 or LLD 14.6 must be made in the same proportion as the attribution.

01/12/2004

LLD 14.4.3

The following assets need not be taken into account in any of the calculations described in LLD 14.5 and LLD 14.6:

(1) approved securities or any interest accrued on them; or

(2) debts to which LLD 13.8.3 R applies; or

(3) rights to which LLD 13.8.5 R, LLD 13.8.8 R or LLD 13.8.9 R applies; or

(4) debts in respect of premiums; or

(5) monies due from, or guaranteed by, the government of any Zone A country; or

(6) holdings in a scheme falling within the UCITS directive; or

(7) deferred acquisition costs; or

(8) any of the assets described under LLD 13.4.3 R (4).

01/12/2004

LLD 14.5

Permitted asset exposure limits

01/12/2004

LLD 14.5.1

Subject to LLD 14.5.2 R, the Society must:

(1) ensure that the value of its admissible assets, calculated under LLD 13 (Assets: valuation and realisability risk); and

(2) take reasonable steps to ensure that the value of the admissible assets for each member individually, calculated under LLD 13 (Assets: valuation and realisability risk);

do not, for each description of asset, exceed the permitted asset exposure limits set out in LLD 14.5.17 R.

01/12/2004

LLD 14.5.2

In applying the less restrictive permitted asset exposure limits set out in LLD 14.5.17 R for individual members, the Society must ensure that in aggregate compliance with Article 22 of the Third Non-Life Directive (92/49/EEC) and Article 22 of the Third Life Directive (92/96/EEC) is maintained.

01/12/2004

LLD 14.5.3

The percentages in the table of permitted asset exposure limits set out in LLD 14.5.17 R should be applied separately to the admissible assets of each description for each member and the Society.

01/12/2004

LLD 14.5.4

In the same way that LLD 9 to LLD 15 does not prohibit the holding of any type of asset, LLD 14.5.1 R does not prohibit the holding of excess assets of each description, but simply limits the extent to which they can be counted for solvency and reporting purposes.

01/12/2004

LLD 14.5.5

The asset exposure under LLD 14.5.1 R must be calculated by determining the amount of exposure to assets of each description by:

(1) ascribing a value to assets of each description under LLD 13 (Assets: valuation and realisabilty risk); or

(2) where the assets are of a description for which no provision for valuation is made in LLD 13 (Assets: valuation and realisabilty risk), an amount which would reasonably be paid as consideration for an immediate assignment or transfer of those assets;

and adjusting the value of the assets under LLD 14.5.10 R to LLD 14.5.15 R.

01/12/2004

LLD 14.5.6

Where there is exposure to assets of any description in excess of the permitted asset exposure limit for those assets, the reduction required under LLD 14.5.1 R must be made:

(1) by deducting (as far as possible) the amount of the excess from the assets of that description; and

(2) where there are insufficient assets of that description to eliminate the excess, by making an appropriate deduction from the aggregate value of the assets which may otherwise be taken into account for any of the purposes in LLD 13 (Assets: valuation and realisability risk) and this chapter.

01/12/2004

LLD 14.5.7

The permitted asset exposure limits in LLD 14.5.17 R are the percentages of all admissible assets (excluding reinsurance recoveries).

01/12/2004

LLD 14.5.8

In the case of an admissible asset not covered by any of the descriptions in LLD 14.5.17 R (other than a derivative contract or quasi-derivative contract), the permitted asset exposure limit in LLD 14.5.1 R is 100%.

01/12/2004

LLD 14.5.9

The amount arrived at under LLD 14.5.5 R for assets of each description must be increased or decreased (as the case may be) by the value of assets of that description which are deemed to have been acquired or disposed of as a result of a futures contract.

01/12/2004

LLD 14.5.10

For the purposes of LLD 14.5.9 R, assets are deemed to have been acquired or disposed of as a result of a futures contract if, at the valuation date, a futures contract has been entered into (but not closed out) which:

(1) provides for the acquisition of assets; or

(2) is listed and provides for the disposal of assets; or

(3) is not listed but provides for the disposal of assets to an approved counterparty, and where it is prudent to assume the disposal will take place within one year of the valuation date.

01/12/2004

LLD 14.5.11

The amount arrived at under LLD 14.5.5 R for assets of each description must be increased or decreased (as the case may be) by the value of assets of that description which are deemed to have been acquired or disposed of through an option.

01/12/2004

LLD 14.5.12

For the purposes of LLD 14.5.11 R, assets are deemed to have been acquired or disposed of through an option if, at the valuation date, it is prudent to assume the option will be exercised and that the option:

(1) provides for the acquisition of assets; or

(2) is listed and provides for the disposal of assets; or

(3) is not listed but provides for the disposal of assets to an approved counterparty, and it is prudent to assume the disposal will take place within one year of the valuation date.

01/12/2004

LLD 14.5.13

The amount arrived at under LLD LLD 14.5.5 R for assets of each description must be increased by the value of any assets of that description which were transferred as initial margin.

01/12/2004

LLD 14.5.14

The amount arrived at under LLD 14.5.5 R for assets of each description must be increased or decreased (as the case may be) by the value of assets deemed to have been acquired or disposed of under:

(1) an undiversified contract for differences; or

(2) a contract or asset other than a diversified contract for differences which is a quasi-derivative contract.

01/12/2004

LLD 14.5.15

For the purposes of LLD 14.5.14 R, assets must be treated as having been acquired when the contracts covering those assets are entered into.

01/12/2004

LLD 14.5.16

In the case of the Society, the amount arrived at under LLD 14.5.5 R and LLD 14.5.9 R to LLD 14.5.15 R for assets of the Society of any description must be increased by an amount representing the exposure, if any, of its subsidiary undertakings to assets of that description, calculating the exposure under paragraphs 4 to 11 of Appendix 4.2 of IPRU(INS) as if the subsidiary undertakings were insurers (whether they are or not).

01/12/2004

LLD 14.5.17

Permitted asset exposure limits (see LLD 14.5.1 R, LLD 14.5.7 R and LLD 14.5.8 R)

Definition of asset

Percentage of all admissible assets, in each case for general insurance business and long-term insurance business

Percentage of all admissible assets, in each case for general insurance business and long-term insurance business for individual members

1

Land or an interest in land. Where there is more than one piece of land the value ascribed to the aggregate may, where applicable, be greater than the value of any pieces of land valued separately

5%

1a

A reversionary interest or a remainder not falling within 1

1%

2

All debts which are, or are to become, due from any one individual (except an individual connected with the member) being debts which are fully secured on any dwelling or any land belonging to it owned or to be purchased by the individual and used or to be used by him for his own residence

1%

3

All debts due, or to become due, from an individual, other than debts specified in 2

0.25%

4

All unsecured debts (other than those arising under the terms of debt securities or debts from a regulated institution) which have, or are to, become due from any one counterparty other than an individual, body corporate or group

1%

5

All unsecured debts (other than those arising under the terms of debt securities or debts from a regulated institution) which are, or are to become, due from any one company, taken with all such debts which are, or are to become due from a connected company of that company

1%

6

All unsecured debts (other than those arising under the terms of debt securities or debts from an approved counterparty) which are, or are to become, due from any one regulated institution, taken together with all such debts which are, or are to become, due from a connected company of that institution

2.5%

7

All debts, other than those arising under the terms of debt securities, which are, or are to become, due from any one counterparty which is not an approved counterparty taken together with all such debts which are, or are to become, due from any connected company (other than an approved counterparty) of that counterparty

5%

8

All debts, other than short term deposits with an approved credit institution or debts arising under the terms of debt securities, which are, or are to become, due from any one approved counterparty, taken with all such debts which are, or are to become, due from any connected company of that approved counterparty

10%

9

All debts which are, or are to become, due from an approved credit institution (or a connected company of that institution) taken together

20%

10

The aggregate of debts of the descriptions in 3, 4 and 5

5%

11

All investments of a kind to which LLD 13.11.1 R applies (other than secured debt securities, debt securities (excluding hybrid securities) issued by a regulated institution or investments which are listed and readily realisable) issued by any one issuer taken together with:

(a) all units or other beneficial interests in a collective investment scheme falling within LLD 13.12.2 R (3) issued by that issuer; and

(b) all investments of the kinds mentioned in this section which are issued by a connected company of that issuer

1%

2%

12

The aggregate of assets of any of the descriptions in 1a and 11

10%

20%

13

All shares and hybrid securities issued by any one issuer with all such securities issued by a connected company of that issuer

2.5%

5%

14

All securities issued by any one issuer which is not an approved counterparty, taken with all securities issued by a connected company, except an approved counterparty, of that issuer

5%

10%

15

All securities issued by any one counterparty

10%

20%

16

All holdings in any one authorised unit trust scheme or recognised scheme

25%

50%

17

All cash

3%

18

All computer equipment

5%

19

All office machinery (except computer equipment) taken together with all furniture, motor vehicles and other equipment

2.5%

01/12/2004

LLD 14.6

Counterparty exposure limits

01/12/2004

LLD 14.6.1

The Society must ensure that the value of its admissible assets calculated under LLD 14.5 are further reduced to the permitted counterparty exposure limits set out in LLD 14.6.3 R, LLD 14.6.4 R, LLD 14.6.10 R and LLD 14.6.11 R, subject to LLD 14.6.14 R (2) and take reasonable steps to ensure that the value of the admissible assets for each member individually calculated under LLD 14.5 are further reduced to the permitted counterparty exposure limits set out in LLD 14.6.3 R, LLD 14.6.4 R, LLD 14.6.10 R and LLD 14.6.11 R, subject to LLD 14.6.14 R.

01/12/2004

LLD 14.6.2

Exposure to any one counterparty (when taken with its connected companies) is also restricted. LLD 14.6 requires the value of all investments in debts due from a counterparty and rights against a counterparty to be aggregated in order to calculate the counterparty exposure. The counterparty exposure calculation is arrived at after taking account of the permitted asset exposure limits, thus avoiding double counting.

01/12/2004

LLD 14.6.3

If the counterparty is an individual, an unincorporated body, or a government of a state or any public body, local authority or nationalised industry of a state, the permitted counterparty exposure limit is 5% of all admissible assets (excluding reinsurance recoveries).

01/12/2004

LLD 14.6.4

If the counterparty is a body corporate or a group of companies, the permitted counterparty exposure limit is the lower of:

(1) if the exposure is to a body which is not an approved counterparty, 5% of all admissible assets (excluding reinsurance recoveries); or

(2) if the exposure is to a body which is an approved counterparty and the exposure does not arise from debts which are, or will become, due as a result of short term deposits made with an approved credit institution, 10% (or where prudent a lower amount) of all admissible assets (excluding reinsurance recoveries); or

(3) 20% of all admissible assets (excluding reinsurance recoveries).

01/12/2004

LLD 14.6.5

Where a reduction is required as a result of LLD 14.6.3 R, LLD 14.6.4 R or LLD 14.6.10 R, the reduction must be made by a deduction from the aggregate value of the assets which could otherwise be taken into account for any of the purposes in LLD 13 (Assets: valuation and realisability risk).

01/12/2004

LLD 14.6.6

Subject to LLD 14.6.7 R and LLD 14.6.8 G:

(1) the value of all investments (determined under LLD 13.11) issued by any one counterparty and the value of all rights (determined under LLD 13.6.1 R and LLD 13.8) against that counterparty, in each case up to the amount of the relevant permitted asset exposure limit, must be aggregated; and

(2) if the counterparty is an issuer of a collective investment scheme falling within LLD 13.12.2 R (3), the value must include the value of units or other beneficial interests in the collective investment scheme.

01/12/2004

LLD 14.6.7

The aggregation required under LLD 14.6.6 R need not include the value of the rights referred to in LLD 14.6.6 R (1), if those rights exist in respect of an obligation to be fulfilled by a counterparty and:

(1) the obligation is a secured obligation which:

(a) is secured by cash deposited with, a letter of credit established with, or securities issued by, or a guarantee provided by, an approved credit institution or an approved financial institution; and

(b) is due to be fulfilled within 12 months of the valuation date; or

(2) the obligation is secured by listed securities which are readily realisable, or by approved securities which:

(a) were deposited with an approved credit institution, an approved financial institution or an approved investment firm; and

(b) are beneficially owned by the counterparty, but will not be available for the benefit of creditors generally if the counterparty is wound up.

01/12/2004

LLD 14.6.8

If there are liabilities to the counterparty which may be offset against the assets mentioned in LLD 14.6.7 R, in accordance with generally accepted accounting practice, then these liabilities may be offset for the purposes of the aggregation required under LLD 14.6.6 R.

01/12/2004

LLD 14.6.9

[In the case of the Society, the amount arrived at under LLD 14.6.6 R to LLD 14.6.8 G must be increased by an amount representing the exposure, if any, of its subsidiary undertakings to the counterparty, calculating the exposure under paragraphs 13 to 15 of Appendix 4.2 of IPRU(INS) as if the subsidiary undertakings were insurers (whether they are or not).]

01/12/2004

LLD 14.6.10

The deduction for an amount of exposure to a counterparty over the permitted counterparty exposure limit must be calculated by subtracting from the amount of the exposure to the counterparty, the amount of the permitted counterparty exposure limit and, if the figure arrived at is negative, it must be taken to be zero.

01/12/2004

LLD 14.6.11

However, if exposure to a counterparty is in excess of the permitted counterparty exposure limit in more than one of the circumstances set out in LLD 14.6.4 R, the deduction required must be made in the circumstances of the greatest excess exposure.

01/12/2004

LLD 14.6.12

If there is exposure to more than one counterparty of the type mentioned in LLD 14.6.4 R (2), then the aggregate of these exposures must not exceed 40% of all admissible assets.

01/12/2004

LLD 14.6.13

For the purposes of LLD 14.6.12 R:

(1) exposure to a counterparty is to be taken into account only up to the level of the permitted counterparty exposure limit for that counterparty;

(2) exposure to a counterparty is not to be taken into account if it does not exceed 5% of all admissible assets (excluding reinsurance recoveries); and

(3) exposure to a counterparty is not to be taken into account if the permitted counterparty exposure limit does not exceed 5% of all admissible assets (excluding reinsurance recoveries).

01/12/2004

LLD 14.6.14

For the purposes of LLD 14.6.1 R:

(1) in respect of individual members, the permitted counterparty exposure limits are double those set out in LLD 14.6.3 R, LLD 14.6.4 R and LLD 14.6.12 R; and

(2) in respect of assets falling within LLD 14.5.17 (16) LLD 14.5.17 R (16), the permitted counterparty exposure limits are 50% of all admissible assets (excluding reinsurance recoveries).

01/12/2004

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Transitional Provisions and Schedules

LLD TP 1

Transitional provisions

LLD TP 1

Transitional provisions

(1)

(2) Material to which the transitional provision applies

(3)

(4) Transitional provision

(5) Transitional provision: dates in force

(6) Handbook provision: coming into force

1

LLD 7.2.1 R

R

Where the Society receives a complaint relating to an act or a failure to act, which occurs before commencement, it may either handle that complaint in accordance with LLD 7.2.1 R or with the complaints handling arrangements in effect at the time of the act or the failure to act.

Indefinite

Commencement

2

LLD 7.4.1 G

G

The Society's first report to the FSA under LLD 7.4.1 G should cover the period from commencement until the end of the following December or June, whichever is earlier.

From commencement until the end of the following December or June whichever is earlier

Commencement

3

LLD 13.2.2 R and LLD 9 to LLD 15

R

The Society must comply with LLD 13.2.2 R by identifying and valuing the assets of individual members that become former underwriting members before 1 January 2003 in accordance with the requirements for the identification and valuation of assets contained in the "Conditions and Requirements Relating to Solvency and Reporting" which were approved by the FSA, exercising the powers of HM Treasury under section 83 of the Insurance Companies Act 1982, and which were applicable immediately before commencement.

Indefinite

Commencement

4

LLD 13.2.2 R and LLD 9 to LLD 15

R

The Society must comply with LLD 13.2.2 R by identifying and valuing the assets of individual members in accordance with the requirements for the identification and valuation of assets contained in the "Conditions and Requirements Relating to Solvency and Reporting" which were approved by the FSA, exercising the powers of HM Treasury under section 83 of the Insurance Companies Act 1982, and which were applicable immediately before commencement.

Commencement to 31.12.2002

Commencement

5

LLD 15.9 to LLD 15.11

R

The Society need not comply with LLD 15.9 and LLD 15.11 provided the Society submits to the FSA, at the same time as the report in LLD 15.2.1 R, a Statutory Statement of Business and Audit Certificate in the form required immediately before commencement.

Commencement to 31.12.2001

Commencement

6

LLD

G

General transitional provisions GEN contains some technical transitional provisions that apply throughout the Handbook and which are designed to ensure a smooth transition at commencement.

From commencement

Commencement

7

LLD 11.4.8 R

R

The Society must take each member's share of the general insurance business premiums to be his share calculated for general insurance business premiums receivable.

1.1.2004 to 31.12.2005

1.1.2004

8

LLD 11.5.1 R

R

In calculating the Society margin, the Society must calculate the first method (premium basis) as set out in IPRU(INS) Appendix 2.1 using only gross premiums receivable and not gross premiums earned.

1.1.2004 to 31.12.2005

1.1.2004

9

LLD 15.2.1 R

R

The Society may prepare the Lloyd's Return in respect of the financial year ending on 31 December 2003:
(1) without taking account of the changes to LLD effected by the Lloyd's Sourcebook (Solvency I Directive) Instrument 2003 or the changes to IPRU(INS) effected by the Interim Prudential Sourcebook for Insurers (Solvency I Directive) Instrument 2003, provided that
(2) the Society sends to the FSA, within six months of the end of that financial year, Form 9 completed in respect of that year and completed in accordance with LLD and IPRU(INS) as amended by those Instruments. The Form 9 sent to the FSA under (2) need not be audited.

1.1.2004 to 31.12.2005

1.1.2004

01/12/2004
Future version of LLD TP 1 after 01/04/2005

LLD Sch 1

Record keeping requirements

01/12/2004

LLD Sch 1.1

The aim of the guidance in the following table is to give the reader a quick overall view of the relevant record keeping requirements.

It is not a complete statement of those requirements and should not be relied on as if it were. In particular, in accordance with the application rules in LLD 16 to LLD 25, the Society and managing agents are subject to prudential requirements in PRU which include record keeping requirements. They should refer to the relevant Schedules to PRU for a view of those requirements.

LLD Sch 1.2

Handbook reference

Subject of record

Contents of record

When record must be made

Retention period

LLD 1.2.2 G (1)

Delegation of responsibility for carrying out the Society's regulatory functions

Not specified

LLD 1.2.4 G (2)

Records of any committee with delegated authority to carry out the Society's regulatory functions

Should include minutes of its meetings

Not specified

LLD 1.2.5 G (2)

An individual's or other person's exercise of his delegated authority to carry out the Society's regulatory functions

Not specified

LLD 1.3.10 G (1)

Interests of those involved in carrying out the Society's regulatory functions

Register of interests

Not specified

LLD 1.3.10 G (2)

Conflicts of interest of those involved in carrying out the Society's regulatory functions

Disclosures of conflicts of interest and the steps taken to handle them

Not specified

LLD 4.2.3 G (1)

Transactions in the capacity transfer market

Adequate audit trails

Not specified

LLD 5.2.3 G

Notifications made to the Society by, or on behalf of, certain persons who have ceased to be underwriting members

Changes of address and deaths of certain persons who have ceased to be underwriting members

Not specified

LLD 7.3.1 G LLD 7.3.2 G

Complaints from members or former members involving allegations that they have suffered, or may suffer, financial loss, material distress or material inconvenience

Not specified

Minimum period of 3 years from receipt of complaint

LLD 9.4.5 R

Accounting records

Sufficient to demonstrate compliance with LLD 9 to LLD 15

As required in accordance with LLD 9 to LLD 15

Normally not less than 10 years

LLD 10.8.3 G (4)

Managing agents' records

Various records and analyses of underwriting and claims

Not specified

01/12/2004
Future version of LLD Sch 1.2 after 31/12/2005

LLD Sch 2

Notification requirements

01/12/2004

LLD Sch 2.1

The aim of the guidance in the following table is to give the reader a quick overall view of the relevant requirements for notifications and reporting.

It is not a complete statement of those requirements and should not be relied on as if it were.

01/12/2004
Future version of LLD Sch 2.1 after 31/12/2005

LLD Sch 2.2

Handbook reference

Matter to be notified

Contents of notification

Trigger event

Time allowed

LLD 2.3.1 D

Any matter likely to be of material concern to the FSA in relation to the regulated activities for which the Society has permission; or underwriting agents; or approved persons or individuals acting for or on behalf of underwriting agents

Includes but is not limited to matters listed in LLD 2.3.4 G

The Society becomes aware of the matter

Immediate

LLD 2.4

Commencement, continuation and cessation of relevant investigations and disciplinary proceedings

Commencement, continuation and cessation of investigations and disciplinary proceedings listed in LLD 2.4.1 D, LLD 2.4.2 D and LLD 2.4.3 G

End of each calendar month

5 business days

LLD 2.6.2 G LLD 2.6.3 G

Proposed changes in byelaws for supervising and regulating the market at Lloyd's

Details of proposed changes, consultation undertaken and responses to consultation

Not specified

The FSA should be given adequate notice

LLD 2.6.4 G

Regulatory and market bulletins; and all amendments to byelaws

Copies of bulletins and amendments

Publication

Immediate

LLD 3.3

Information about the Central Fund

Information on the Central Fund's net market value, payments, investments, changes in any insurance policy and any claims on the latter, or circumstances likely to lead to a claim

End of each calendar quarter

2 weeks

LLD 4.3

Information about the capacity transfer market

Capacity transferred, investigations into conduct in the capacity transfer market, and all complaints received

End of each calendar quarter in which any capacity is transferred

1 month

LLD 7.4

Information about certain complaints from members and former members

Number, nature, resolution and referral of these complaints

End June and end December

1 month

LLD 10.4

Intention to approve or amend a trust deed

New trust deed and proposed amendment, plus a statement of the purpose of the deed/amendment and an analysis of its impact

The Society intends to approve or amend a trust deed

Sufficient time for the FSA to consider proposals before Society approval

LLD 10.5.2 R

Material changes proposed to risk-based capital system

Details of proposed changes

The Society intends to make amendments to risk-based capital system maintained under LLD 10.5.1 R

Adequate time for the FSA to review proposals and assess their implication

LLD 10.5.4 R

Independent reviews commissioned by the Society of the operation of the RBC model

Results of each review

Completion of the review

Not specified

LLD 10.6

Reviews of aggregations of risk and plans for monitoring aggregations of risk

Discussion

Completion of regular reviews

Not specified

LLD 10.9.5 R

A syndicate actuary of a general insurance business syndicate will or may be unable to provide an unqualified opinion under LLD 10.9.4 R (3)(b)

Not specified

The Society becomes aware

Prompt notification

LLD 11.2.4 R

If the solvency requirements of LLD 11.2.1 R are not maintained

A plan for the restoration of a sound financial position

The Society becomes aware

Prompt notification

LLD 11.2.11 R

If criterion similar to the guarantee fund requirement for insurers is not maintained

A short-term financial scheme similar to that required from insurers under SUP, Appendix 2 1.4

The Society becomes aware

Prompt notification

LLD 15

Lloyd's Return and Lloyd's global account

Detailed reports in accordance with the requirements of LLD 15 and its Annexes

End of each financial year

6 months

LLD Sch 3

Fees and other required payments

01/12/2004

LLD Sch 3.1

There are no requirements for fees or other payments in LLD.

01/12/2004

LLD Sch 4

Powers exercised

01/12/2004

LLD Sch 4.1

The following powers have been exercised by the FSA to make LLD

01/12/2004

LLD Sch 4.2

The rules in LLD 3 to LLD 5 and LLD 7 to LLD 15 are made under section 138 of the Act (General rule-making power).

01/12/2004
Future version of LLD Sch 4.2 after 31/12/2005

LLD Sch 4.3

The directions in LLD 2 are given under section 318 of the Act (Exercise of powers through Council).

01/12/2004

LLD Sch 4.4

The direction in LLD 6is given under section 316 of the Act (Direction by Authority).

01/12/2004
Future version of LLD Sch 4.4 after 31/12/2005

LLD Sch 4.5

The guidance is given under section 157(1) of the Act (Guidance).

01/12/2004

LLD Sch 5

Rights of action for damages

01/12/2004

LLD Sch 5.1

The table below sets out the rules in LLD contravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention.

01/12/2004

LLD Sch 5.2

If a "Yes" appears in the column headed "For private person?", the rule may be actionable by a "private person" under section 150 (or, in certain circumstances, his fiduciary or representative; see article 6(2) and (3)(c) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 (SI 2001/2256)). A "Yes" in the column headed "Removed" indicates that the FSA has removed the right of action under section 150(2) of the Act. If so, a reference to the rule in which it is removed is also given.

01/12/2004

LLD Sch 5.3

The column headed "For other person" indicates whether the rule may be actionable by a person other than a private person (or his fiduciary or representative) under article 6(2) and (3) of those Regulations. If so, an indication of the type of person by whom the rule may be actionable is given.

01/12/2004

LLD Sch 5.4

Right of action under section 150

Chapter/Appendix

Section/Annex

Paragraph

For private Person?

Removed?

For other person?

3

All rules

No

Yes

LLD 3.1.2 R

No

4

All rules

No

Yes

LLD 4.1.2 R

No

5

All rules

No

Yes

LLD 5.1.2 R

No

7

All rules

No

Yes

LLD 7.1.2 R

No

8

All rules

No

Yes

LLD 8.1.2 R

No

9

Rules requiring the Society to have or maintain adequate financial resources

No

-

No

9

All other rules

No

Yes

LLD 9.1.3 R

No

10

Rules requiring the Society to have or maintain adequate financial resources

No

-

No

10

All other rules

No

Yes

LLD 10.1.2 R

No

11

Rules requiring the Society to have or maintain adequate financial resources

No

-

No

11

All other rules

No

Yes

LLD 11.1.2 R

No

12

Rules requiring the Society to have or maintain adequate financial resources

No

-

No

12

All other rules

No

Yes

LLD 12.1.2 R

No

13

Rules requiring the Society to have or maintain adequate financial resources

No

-

No

13

All other rules

No

Yes

LLD 13.1.2 R

No

14

Rules requiring the Society to have or maintain adequate financial resources

No

-

No

14

All other rules

No

Yes

LLD 14.1.2 R

No

15

Rules requiring the Society to have or maintain adequate financial resources

No

-

No

15

All other rules

No

Yes

LLD 15.1.2 R

No

LLD Sch 6

Rules that can be waived

01/12/2004

LLD Sch 6.1

The rules in LLD 3 to LLD 5 and LLD 7 to LLD 15 can be waived by the FSA under section 148 of the Act (Modification or waiver of rules).

01/12/2004
Future version of LLD Sch 6.1 after 31/12/2005

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