Letter: Losses at Lloyd's: the role of the chairman and what must be done

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Sir: When the pressure for a London Securities and Exchange Commission (SEC) becomes irresistible, it will be too late. It may already be too late. I travel a great deal around the world, and in my experience the reputation of London as a financial centre is in steady decline, even though the volume of business may not show this.

The difference between the SEC and self-regulation is very simple. The SEC sets out to protect those who might be exploited, while self-regulation sets out to protect those who do the exploiting. The disgraceful failure of self-regulation at Lloyd's, as pointed out in the Walker report and emphasised passionately at the Extraordinary General Meeting, illustrates this difference only too well.

Self-regulation is, by its very nature, retro-active, with a mild slap on the wrist for the transgressors and protestations of future changes designed to protect the 'reputation' of the market. The exploited are ignored while the professionals think up some new wheeze to exploit the next batch of reassured suckers. Lloyd's may think that it can now abandon names and seek corporate capital, but the fiduciary duty of any corporate director would make him or her think twice about committing funds to such a disgraced organisation.

The quite remarkable ineptitude of the DTI in its relations with Lloyd's should be a matter of shame to its minister. The reputation of Lloyd's cannot best be protected by arrogant neglect. For Lloyd's to survive there has to be an admission of neglect, a reduction of smug complacency on the part of insiders (as illustrated at the EGM), and the floating of special Lloyd's bonds with a base interest rate augmented by a profits levy.

Yours sincerely,


London, W1

28 July