LLD 8
Compensation
arrangements for individual members
LLD 8.1
Application and purpose
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Application
LLD 8.1.1
See Notes
This
chapter applies to the Society.
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LLD 8.1.2
See Notes
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.
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Purpose
LLD 8.1.3
See Notes
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).
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LLD 8.1.4
See Notes
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.
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LLD 8.2
Compensation arrangements for individual members
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LLD 8.2.1
See Notes
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.
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LLD 8.2.2
See Notes
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.
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LLD 8.2.3
See Notes
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.
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LLD 8.2.4
See Notes
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.
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LLD 8.2.5
See Notes
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.
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LLD 8.2.6
See Notes
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.
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LLD 8.2.7
See Notes
The Society should
consult interested parties on proposed changes in the byelaws establishing the arrangements referred
to in LLD
8.2.1 R.
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LLD 8.2.8
See Notes
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.
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