On 5 November, Lloyd's issued Market Bulletin Y4202, entitled Principles of Enforcement Action (the Bulletin). The Bulletin, prepared by the Market Supervision and Review Committee (the body responsible for investigating matters of potential misconduct) sets out the following non-exhaustive list of the types of conduct that may result in enforcement action being taken:
- Any act of dishonesty (Principle 1).
- The misappropriation, or causing or permitting the misappropriation of money or other property (especially for direct or indirect personal gain) (Principle 2).
- The creation or use, or causing or permitting the creation or use, of false or misleading documents or other information (Principle 3).
- Breaching or causing or permitting a breach of a person's fiduciary or agency obligations related to the conduct of business in the Lloyd's market (for example, by making or permitting the making of a secret profit or failing to account for monies) (Principle 4).
- Failure or causing or permitting a failure to deal openly and honestly with, or provide clear and accurate information to, members, policyholders, counterparties or other relevant parties (Principle 5).
- Any act or omission, or the causing or permitting of any act or omission, capable of damaging Lloyd's brand, licences or the Central Fund or otherwise likely to bring Lloyd's or the Lloyd's market into disrepute (Principle 6).
- Failure or causing or permitting a failure to manage or safeguard properly, honestly or prudently monies or other assets held on behalf of policyholders or members in accordance with the terms of any applicable trust or agreement (Principle 7).
- Failure or causing or permitting a failure to deal with Lloyd's in an open, honest and transparent manner or to ensure that Lloyd's is promptly informed of any matter which it reasonably ought to know (Principle 8).
- Failure or causing or permitting a failure to organise and control the business of an underwriting agent in a responsible manner or to maintain proper records and systems for the conduct of its business and the management of risk (Principle 9).
The principles do not set out every circumstance in which Lloyd's may take enforcement action; any decision by Lloyd's to take such action will take into account all of the relevant facts. The Bulletin clarifies that Lloyd's enforcement jursidiction extends to members, managing agents, members' agents and their directors, partners and workers. In carrying out its enforcement activities, Lloyd's will act in accordance with the co-operation agreement with the FSA to avoid duplication, share information and to determine who should take the lead in any investigations. The sanctions available to Lloyd's are a permanent or temporary ban from Lloyd's, public censure and/or a fine.