COMP 1.5 Application to Lloyd's
Compensation arrangements for individual members
1The compensation scheme will not compensate members or former members if firms are unable to satisfy claims made in connection with regulated activities relating to their participation in Lloyd's syndicates. Separate rules and guidance are therefore needed.
1The Society must maintain byelaws establishing appropriate and effective arrangements to compensate individual members and former members who were individual members if underwriting agents are unable, or likely to be unable, to satisfy claims by those members relating to regulated activities carried on in connection with their participation in Lloyd's syndicates.
1For the purposes of COMP 1.5.8 R "individual member" includes a member which is a limited liability partnership or a body corporate whose members consist only of, or of the nominees for, a single natural person or a group of connected persons.
1The arrangements referred to in COMP 1.5.8 R:
- (1)
will not compensate losses arising only as a result of underwriting or investment risk to which individual members or former members who were individual members are or were exposed by their participation in Lloyd's syndicates;
- (2)
may be restricted to compensation for losses arising out of fraud, dishonesty or failure to account; and
- (3)
should cover all regulated activities carried on by underwriting agents relating to Lloyd's syndicate capacity and syndicate membership.
1The arrangements referred to in COMP 1.5.8 R should have a governance structure that is operationally independent from the Society, but which is nevertheless accountable to the Society for the proper administration of the compensation arrangements.
1A contravention of COMP 1.5.8 R does not give rise to a right of action by a private person under section 138D of the Act (Actions for damages) and that rule is specified under Section 138D(3) of the Act as a provision giving rise to no such right of action.