Part XIX Lloyd’s
Power to apply Act to Lloyd’s underwriting
I1316 Direction by F6a regulator
1
The general prohibition or (if the general prohibition is not applied under this section) a core provision applies to the carrying on of an insurance market activity by—
a
a member of the Society, or
b
the members of the Society taken together,
only if F13a regulator so directs.
F121A
A direction under subsection (1)—
a
may be given by the FCA only if it considers that giving the direction is necessary or expedient for the purpose of advancing one or more of its operational objectives, and
b
may be given by the PRA only if it considers that giving the direction is necessary or expedient for the purpose of advancing its general objective or (if section 2C applies) the insurance objective.
1B
A direction under subsection (1) which applies the general prohibition to a member of the Society, or to the members of the Society taken together, may be given by a regulator only with the consent of the other regulator.
2
A direction given under subsection (1) which applies a core provision is referred to in this Part as “an insurance market direction”.
3
In subsection (1)—
“core provision” means a provision of this Act mentioned in section 317; and
“insurance market activity” means a regulated activity relating to contracts of insurance written at Lloyd’s.
4
In deciding whether to give a direction under subsection (1), F31the regulator concerned must have particular regard to—
a
the interests of policyholders and potential policyholders;
F19b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
A direction under subsection (1) must be in writing.
6
A direction under subsection (1) applying the general prohibition may apply it in relation to different classes of person.
7
An insurance market direction—
a
must specify each core provision, class of person and kind of activity to which it applies;
b
may apply different provisions in relation to different classes of person and different kinds of activity.
8
A direction under subsection (1) has effect from the date specified in it, which may not be earlier than the date on which it is made.
9
10
F24A regulator who gives a direction under subsection (1) may charge a reasonable fee for providing a person with a copy of the direction.
11
317 The core provisions.
1
The core provisions are Parts V, F79A, XI, XII, XIV, XV, XVI, XXII and XXIV, sections 384 to 386 and Part XXVI.
2
References in an applied core provision to an authorised person are (where necessary) to be read as references to a person in the class to which the insurance market direction applies.
3
An insurance market direction may provide that a core provision is to have effect, in relation to persons to whom the provision is applied by the direction, with modifications.
I2318 Exercise of powers through Council.
1
F9A regulator may give a direction under this subsection to the Council or to the Society (acting through the Council) or to both.
2
A direction under subsection (1) is one given to the body concerned—
a
in relation to the exercise of its powers generally with a view to achieving, or in support of, a specified objective; or
b
in relation to the exercise of a specified power which it has, whether in a specified manner or with a view to achieving, or in support of, a specified objective.
3
“Specified” means specified in the direction.
F303A
A direction under subsection (1)—
a
may be given by the FCA only if it considers that giving the direction is necessary or expedient for the purpose of advancing one or more of its operational objectives, and
b
may be given by the PRA only if it considers that giving the direction is necessary or expedient for the purpose of advancing its general objective or (if section 2C applies) the insurance objective.
4
A direction under subsection (1) may be given—
a
instead of giving a direction under section 316(1); or
b
if F22the regulator concerned considers it necessary or expedient to do so, at the same time as, or following, the giving of such a direction.
5
A direction may also be given under subsection (1) in respect of underwriting agents as if they were among the persons mentioned in section 316(1).
6
A direction under this section—
a
does not, at any time, prevent the exercise by F8a regulator of any of its powers;
b
must be in writing.
7
8
F20A regulator who gives a direction under subsection (1) may charge a reasonable fee for providing a person with a copy of the direction.
9
319 Consultation.
F31
Before a regulator gives a direction under section 316 or 318, it must—
a
in a case where section 316(1B) requires the regulator to obtain the consent of the other regulator, obtain that consent,
b
in any other case, consult the other regulator, and
c
after complying with paragraph (a) or (b), publish a draft of the proposed direction.
2
The draft must be accompanied by—
a
a cost benefit analysis; and
b
notice that representations about the proposed direction may be made to F21the regulator within a specified time.
F173
Before a regulator gives the proposed direction—
a
it must have regard to any representations made to it in accordance with subsection (2)(b), and
b
if it was required by subsection (1)(b) to consult the other regulator and proposes to give a direction which differs from the draft published under subsection (1) in a way which is, in the opinion of the regulator, significant, it must again consult the other regulator.
4
If F2the regulator gives the proposed direction it must publish an account, in general terms, of—
a
the representations made to it in accordance with subsection (2)(b); and
b
its response to them.
5
If the direction differs from the draft published under subsection (1) in a way which is, in the opinion of F28the regulator, significant—
a
F28the regulator must (in addition to complying with subsection (4)) publish details of the difference; and
b
those details must be accompanied by a cost benefit analysis.
F16
Subsections (1)(c) and (2) to (5) do not apply in relation to—
a
a direction given by the FCA if it considers that the delay involved in complying with them would be prejudicial to the interests of consumers, as defined in section 425A, or
b
a direction given by the PRA if it considers that the delay involved in complying with them would—
i
be prejudicial to the safety and soundness of the Society, and the members of the Society, taken together, or
ii
in a case where section 2C applies, be prejudicial to securing the appropriate degree of protection for policyholders.
7
Neither subsection (2)(a) nor subsection (5)(b) applies if F4the regulator concerned considers—
a
that, making the appropriate comparison, there will be no increase in costs; or
b
that, making that comparison, there will be an increase in costs but the increase will be of minimal significance.
8
9
When F32a regulator is required to publish a document under this section it must do so in the way appearing to it to be best calculated to bring it to the attention of the public.
F2710
“Cost benefit analysis” means—
a
an analysis of the costs together with an analysis of the benefits that will arise—
i
if the proposed direction is given, or
ii
if subsection (5)(b) applies, from the direction that has been given, and
b
subject to subsection (10A), an estimate of those costs and of those benefits.
10A
If, in the opinion of the regulator concerned—
a
the costs or benefits referred to in subsection (10) cannot reasonably be estimated, or
b
it is not reasonably practicable to produce an estimate,
the cost benefit analysis need not estimate them, but must include a statement of the opinion of the regulator concerned and an explanation of it.
11
“The appropriate comparison” means—
a
in relation to subsection (2)(a), a comparison between the overall position if the direction is given and the overall position if it is not given;
b
in relation to subsection (5)(b), a comparison between the overall position after the giving of the direction and the overall position before it was given.