Angry paying names threaten legal action

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Financial Editor

An angry group of Lloyd's names is on the point of taking the market to a judicial review if they do not win an improvement in the pounds 3.2bn rescue offer.

Solicitors representing the Paying Names Action Group wrote on Wednesday to Ron Sandler, chief executive of Lloyd's, setting out their objections to the deal and demanding a reply within seven days.

The paying names believe they are unfairly treated because the Lloyd's plan gives more recompense to members who have refused to pay their debts than to those who paid up on time.

In one notorious case, identical twins with identical investments in the market found that one brother is due to pay twice as much as the other. The one with the higher bill had paid his losses at Lloyd's and the other had held out.

Tony Welford, chairman of the action group, said he had 3,000 members, they had "deep pockets" and if Lloyd's refused to negotiate over a fair deal "we will go ahead with our legal action".

Mr Welford said it was "strongly arguable that Lloyd's has misconstrued its powers in relation to reconstruction and renewal. Litigation will be very regrettable. However, we are determined and I hope Lloyd's will give us an alternative."

The action group wants Lloyd's to agree greater parity between names who have paid and those who have not. The counsel advising the group, Richard Field, QC, has advised that it has a case to ask for a judicial review.

On Monday, Lloyd's won a resounding vote in favour of the first steps towards the rescue.