Lloyd's evidence queried
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Your support makes all the difference.A senior civil servant from the Department of Trade and Industry has been accused of being "less than honest" with MPs about the financial health of the Lloyd's of London insurance market.
Members of the Treasury and Civil Service Select Committee are to be urged by their colleague, Brian Sedgemore, Labour MP for Hackney and Shoreditch, to recall Jonathan Spencer, under-secretary in charge of the insurance division at the DTI.
Mr Sedgemore claimsthat Mr Spencer left MPs with the clear impression that Lloyd's had no problems with its statutory solvency position when he appeared before them lastFebruary.
However, it emerged earlier this week that Lloyd'sbelieves that it could fail its annual solvency test next year. The market's authorities are working to put a rescue plan in place before the end of the summer.Mr Sedgemore said: "If he did not mislead us he was certainly less than honest about solvency."
The MPs have finished taking evidence as part of their investigation into regulation at Lloyd's. Mr Sedgemore added: "I believe there is a case for a one-off hearing. This is not a minor matter. He was given every opportunity to say that Lloyd's might fail. He adamantly failed to do so. The select committee has to operate on the principle of utmost good faith. He kept on insisting it was solvent."
Lloyd's, like all other insurance businesses, must pass an annual test to show that it has sufficient assets to meet its liabilities. If it failed, the market would have to close.
Lloyd's risks failing its 1996 test because 7,000 names have refused to pay more than £1bn of losses. The market's central fund, which is meant to meet the debts of defaulting names, does not havesufficient cash to meet claims.
Part of the rescue plan involves levying names and corporate capital investors who are trading on at Lloyd's.
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