Part

LLD Lloyd's

Chapter

Society's regulatory functions

Printed on: 05/07/2024

Rulebook at: 31/12/2004

LLD 1

Society's regulatory functions

LLD 1.1

Application and purpose

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Application

LLD 1.1.1

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The guidance in this chapter is relevant to the Society.
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Purpose

LLD 1.1.2

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The guidance in this chapter is intended to:

  1. (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. (2) protect policyholders and members; and
  3. (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.
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LLD 1.2

Carrying out the Society's regulatory functions

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Delegation

LLD 1.2.1

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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.
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LLD 1.2.2

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The Council should:

  1. (1) approve and record the delegation referred to in LLD 1.2.1 G; and
  2. (2) review it at least once each year.
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LLD 1.2.3

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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.
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LLD 1.2.4

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

  1. (1) have formal terms of reference;
  2. (2) make and retain proper records, including minutes of its meetings; and
  3. (3) be composed of an appropriate number of individuals who are collectively and individually fit and proper.
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LLD 1.2.5

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

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

LLD 1.2.6

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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.
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Dealing with the FSA

LLD 1.2.7

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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.
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LLD 1.2.8

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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.
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LLD 1.2.9

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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.
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LLD 1.3

Conflicts of interest

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Arrangements

LLD 1.3.1

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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.
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LLD 1.3.2

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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.
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LLD 1.3.3

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In LLD 1.3 "conflicts of interest" include the appearance of a conflict of interest as well as an actual conflict of interest.
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LLD 1.3.4

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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.
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LLD 1.3.5

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

  1. (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. (2) the necessity to transfer authority to take decisions or responsibilities to alternates should a conflict of interest arise.
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Guidelines

LLD 1.3.6

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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.
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LLD 1.3.7

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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.
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LLD 1.3.8

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The guidelines referred to in LLD 1.3.6 G should include:

  1. (1) guidelines for determining whether a conflict of interest exists;
  2. (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. (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. (4) the circumstances in which a general advance disclosure of any conflicts of interest will usually be sufficient;
  5. (5) the circumstances in which a general advance disclosure may not be sufficient;
  6. (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. (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. (8) the penalty or other sanction that will apply if guidelines are not followed or requirements are not complied with.
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LLD 1.3.9

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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.
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Register and records

LLD 1.3.10

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The Society should:

  1. (1) make and retain a register of interests; and
  2. (2) make and retain records of disclosures of conflicts of interest and the steps taken to handle them.
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LLD 1.4

Confidential regulatory information

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LLD 1.4.1

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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.
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