561.This Part of the Act makes a number of provisions which supplement other parts of the Act to bring the Society of Lloyd’s (“the Society”) within the general regulatory framework.  These provisions are needed to reflect the unique legal status of the Society and its members, and the functions of the Council of Lloyd’s (“the Council”), the governing body of the Society, under the Lloyd’s Acts 1871-1982, in relation to the Lloyd’s community.
562.Lloyd’s is regulated for solvency purposes by the Authority in accordance with the arrangements under Part IV of the ICA 1982.  The FS Act 1986 provides an exemption for Lloyd’s and underwriting agents as respects investment business carried on by them in connection with or for the purposes of insurance business at Lloyd’s.  For most purposes, regulation of the Society has been undertaken by the Council.  The Act gives the Authority considerable discretion as to how it discharges its obligations for the regulation of Lloyd’s.
563.The external regulation of the Lloyd’s community by the Authority is achieved by a number of different provisions in the Act.  By virtue of this Part, the Society - a body corporate - is to be authorised to carry on certain regulated activities.  The permission will be defined by the Authority, as if it had been granted under Part IV.  Primarily, the permission will cover making arrangements which enable members to carry out contracts of insurance.  The activities of managing and members’ agents (or “underwriting agents”) will become regulated activities for the purposes of the Act, and so underwriting agents will need have relevant permission under Part IV.  As authorised persons, the Society and agents will be subject to the full range of the Authority’s powers under the Act, including its rules and its powers of investigation and discipline and, ultimately, the power to withdraw authorisation, as is the case with other authorised persons under the general provisions of the Act.
564.Members of Lloyd’s will benefit from an exemption from the need to be authorised in relation to contracts of insurance effected or carried out at Lloyd’s.  They will, nonetheless, be subject to regulatory arrangements as directed by the Authority under powers contained in this Part, and subject to the powers of the Council.  As a minimum, the Authority will need to require the members to meet the solvency requirements laid down under the relevant EC directives.  A member of Lloyd’s would, however, need permission to carry on any other regulated activity, for example advising on investments.
Commentary on Sections Part Xix: Lloyd’s