BRUSSELS, Belgium-A European Parliament committee met Tuesday to discuss whether to submit a report on the adequacy of the United Kingdom's regulation of Lloyd's of London for debate by the full legislature.

The committee released the report last October following complaints by Lloyd's names that the United Kingdom failed to implement regulations of the European Union that required Lloyd's to have adequate reserves. As a consequence, the names allege, they were required to contribute additional sums to cover underreserved losses.

Among other things, the report called for a formal inquiry into U.K. compliance with E.U. insurance directives from 1973 to the present. The report finds that the U.K. failed to implement various E.U. directives until 1982, several years after they were introduced, and that regulatory audit requirements regarding names and Lloyd's solvency were not correctly applied.

The European Parliament's Petitions Committee shelved discussion of the report, however, at Lloyd's request pending the outcome of a separate investigation of the names' allegations by the European Commission (BI, Oct. 14, 2002).

The Petitions Committee met yesterday, though, to consider whether the report should be submitted to the full European Parliament for debate in June. The committee is due to deliver its decision on May 28.

The report--prepared by Roy Perry, a member of the European Parliament and a committee member--called for a committee of inquiry to investigate whether relevant E.U. directives were applied to Lloyd's from 1973 to the present day. The inquiry would also consider how much-if any-compensation should be paid by the U.K. government to Lloyd's names for losses during these years.

The Petitions Committee learned yesterday that the U.K. government has asked for a two-month extension period to give a response to the second letter, which was sent on Jan. 20. The Commission is also awaiting a response to an "administrative letter" to the U.K. government seeking an explanation as to whether Equitas, Lloyd's reinsurance vehicle, meets E.U insurance requirements.

"While the Commission is not obliged to take action over past failures in the regulatory regime at Lloyd's, the European Parliament is pressing the Commission to make a clear statement that the previous regime was in default, otherwise it is very difficult for aggrieved names to get any of their money back as verbal statements, inference or press statements are inadmissible in U.K. courts," Mr. Perry said.

A Lloyd's spokeswoman said: "The issues relating to past Lloyd's losses have been examined extensively over many years in many cases by the U.K. courts, most recently in the Court of Appeal judgment in the Jaffray case which found in Lloyd's favor."