The official record of the European Parliament is intriguing. It says that a certain "Madame X" petitioned the Parliament in 1997 about the way Lloyd's of London was being regulated.
"She was reluctant to reveal her name because she feared the reaction of Lloyd's," says Roy Perry, the former Conservative MEP who was on the Petitions Committee at the time.
Madame X's petition was followed up by at least five more, all from Lloyd's Names who had lost substantial amounts investing in the insurance market. They were happy to reveal their identities.
Frits Bolkestein, the phlegmatic Dutchman who was the European Commissioner for the internal market, launched an investigation into the regulation of Lloyd's. He sent a letter on 20 December 2001 to Sir Nigel Sheinwald, the UK's ambassador at the European Union, saying he was launching formal infringement proceedings against the UK for breaches of the EC's non-life insurance directives. In a 19-page letter, Mr Bolkestein was damning about 20 years of failures in oversight by the UK authorities.
The Treasury, which by then had taken over regulation for Lloyd's from the Department of Trade and Industry, shot a letter back saying it could explain everything, if Mr Bolkestein could give it some time.
It sent a further reply on 30 April 2002, and after some to-ing and fro-ing Mr Bolkestein sent a letter on 21 January 2003 addressed to the Foreign Secretary, Jack Straw. In it, he said: "The Commission considers there is evidence suggesting that the United Kingdom is not ensuring proper application of ... Council Directive 73/239/EEC as amended, with respect to the prudential regulation and supervision of Lloyd's."
The UK Government then went into overdrive, firing off additional letters to Mr Bolkestein, and a group of Treasury officials met with him in May 2003. In the end, Mr Bolkestein dropped the investigation, saying that the UK's regulatory reforms - the Financial Services & Markets Act, which placed Lloyd's under the supervision of the Financial Services Authority - were enough to prevent the EC taking any action against the Government.
However, the European Parliament is not satisfied with this position. A motion, approved by the Parliament's Legal Affairs Committee, to take legal action against the EC for failing to investigate Lloyd's adequately, was sidelined on a technicality just before last year's parliamentary election.
But the motion will come back up for discussion this week, with Diana Wallis, a Liberal Democrat MEP, pushing for the EC to be taken to the European Court of Justice. MEPs believe the UK government was let off the hook despite years of systematic regulatory failure. It is expected that the President of the Parliament, Josep Borrell, will approve the taking of a case to the court.
Michael Cashman, a Labour MEP, believes the action is doomed to failure: "Frits Bolkestein made it clear he could only take action if the law that is in place is not compliant with the directive, and he made it clear that the UK was now compliant."
Mr Cashman thinks the best chance for Lloyd's investors lies in the European Court of Human Rights. A case is already being taken to the ECHR by a group of Lloyd's Names frustrated by the Court of Appeal's refusal to find against Lloyd's in the so-called "Jaffray" case. In that action, which was heard in court during 2000, the judges ruled that Lloyd's had failed in its duty to Names by not stopping fraud in the market. However, the 1982 Lloyd's Act was so heavily weighted in the market's favour that it could not be held liable.
The Independent on Sunday has learnt that a number of other Lloyd's Names, many of them based outside the UK, plan to take action in the ECHR, frustrated by the UK courts, which have argued that the Lloyd's Act gives blanket protection to the market and the people who run it.
Lloyd's has many more battles to fight.
Next week: 'The Independent on Sunday' will investigate how Lloyd's used the law and unusual practices to force Names to agree to contracts they did not want sign.
NAMES AND SHAME: THE LLOYD'S SAGA
1871: the Lloyd's of London insurance market is incorporated by a private Act of Parliament.
1982: Another Act is passed setting out how Lloyd's should be run.
1988-92: Lloyd's amasses losses of $8bn, pushing it to the brink of collapse after a series of natural disasters - such as the Exxon Valdez oil spill, the San Francisco earthquake and Alpha Piper oil rig fire - as well as rising asbestosis claims.
1993: the former Sedgewick chairman, David Rowland, is made the first full-time chairman of Lloyd's.
1994: former U2 concert promoter and private Lloyd's investor Michael Deeny wins a £500m court case against Lloyd's agents, forcing the insurance market to the negotiating table with other investors, otherwise known as Lloyd's Names.
1995: Lloyd's comes up with £3.1bn "Reconstruction and Renewal" settlement offer for its thousands of individual investors - who include Jeffrey Archer, Camilla Parker Bowles and Robert Maxwell - in a bid to end litigation stemming from its losses. Former Exco chief Ron Sandler is appointed chief executive.
1996: the market's pre-1993 liabilities are spun off into a £16bn reinsurance group, Equitas, as Lloyd's continues to negotiate with the Names.
1997: Reconstruction and Renewal settlement is finally accepted by just under 95 per cent of the Names.
1999: Lloyd's says Nick Prettejohn will take over from Sandler as chief executive. As head of strategy in 1995, he was heavily involved in the Reconstruction and Renewal plan.
2000: the market announces that up to 1,100 employees face the axe as part of a cost-cutting drive.
2001: Lloyd's woes continue with a £3.2bn loss from the 11 September terrorist attacks.
2002: the market bounces back into the black with a profit of £834m. The Financial Services Authority takes over regulation of Lloyd's and Equitas. Lloyd's embarks on reform programme to cut the number of Names and improve the governance of underwriters and transparency in its accounts. Lord Levene becomes chairman.
2004: Equitas announces it will place another £296m in its reserves to cover further asbestos claims, taking its total reserves to £2.8bn. This is its fourth rise in asbestos liabilities in five years.Reuse content