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Vol. 9 No. 28 : 24 July 2003
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By Peter Chapman
THE European Commission is poised to drop its long-running investigation into the way the UK supervised the world-famous Lloyd's of London insurance market.
European Voice has obtained a copy of a letter dated 22 July stating that single market chief Frits Bolkestein's department favours closing the formal probe that began in December 2001.
The letter was to investors or 'names', ruined by billions of euro of asbestos claims, who alleged they would never have put their money into Lloyd's had they known a proper audit, required by a 1973 European directive, had not been carried out.
Jean-Claude Thebault, in charge of financial institutions' rules, wrote that the UK had now addressed Commission concerns about the supervision of the market and Equitas, the special Lloyd's unit which was set up to handle asbestos claims.
Crucially, noted Thibault, the UK had also put in place a new regime for the regulation of financial markets in late 2001.
"We will accordingly be proposing that the Commission terminate this case at one of its forthcoming meetings," said Thebault, adding that complainants have six weeks from receipt of the letter to offer new evidence to make the EU executive think again.
Angry names, who lodged their complaints more than a year before the new regime entered into force, said the Commission should still issue a rebuke for past failings. This would allow them to seek compensation for their losses.
But Thebault said it was not the Commission's job to look into the past.
"The objective of infringement proceedings under EU law is to establish or restore the compatibility of national law with EU law, not to rule on the past compatibility or incompatibility of national law," he said.
John Pascoe, the man whose initial complaint triggered the Lloyd's probe, said: "The move leaves a nasty taste in the mouth."
"The performance of the Commission to date can be described as pathetic - particularly as guardians of the treaty and protectors of citizens' rights. Based on this experience it failed to justify its existence," he added.
© Copyright 2003 The Economist Newspaper Limited. All rights reserved.