MEPs call for action on Lloyd's scandal

MEPs are set to launch a legal action over the UK Government's failure to properly regulate the Lloyd's of London insurance market.

MEPs are set to launch a legal action over the UK Government's failure to properly regulate the Lloyd's of London insurance market.

An investigation by the European Commission found that the market lacked financial controls, failed to tell the Government about important financial problems, and pressured accountants to give it a clean bill of health.

The abuses took place over a 20-year period, in which time investors at Lloyd's - known as Names - lost more than £8bn. The Government's failure to stop this scandal breached European directives, the commission's investigation concluded.

However, because the Treasury had acted to bring in the City's financial watchdog, the Financial Services Authority, to regulate Lloyd's, the commission took no action against the Government.

This decision has angered MEPs, who are preparing to take the commission to the European Court of Justice over its decision not to act.

A meeting of the European Parliament's legal affairs committee takes place this week when the issue is expected to be raised. If the committee votes in favour of action, the Parliament's president, Josep Borrell, is obliged to take the case to court.