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INSPRU 8.3 The Central Fund

Application

INSPRU 8.3.1R

This section1 applies to the Society.

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Purpose

INSPRU 8.3.2G

The rules and guidance in this section1 are intended to promote confidence in the market at Lloyd's, and to protect certain consumers of services provided by the Society in carrying on, or in connection with or for the purposes of, its regulated activities. They do this by:

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  1. (1)

    giving guidance to the Society about the protection that the Central Fund should provide for policyholders; and

  2. (2)

    enabling the FSA to keep under review the protection the Central Fund provides for policyholders.

Enabling Provision

INSPRU 8.3.3D

The directions in this section1 are given under section 318 of the Act (Exercise of powers through Council) for the purpose of achieving the objective specified, as required by section 318(2) of the Act.

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INSPRU 8.3.4D

The directions given in this section1 are given in relation to the exercise of the powers by the Society in respect of the Central Fund and are given with a view to achieving the objective of ensuring that the Society in making payments or in providing any other financial assistance from the Central Fund does so on a basis which takes no account of amounts of compensation which policyholders may receive under the provisions of the compensation scheme in respect of protected claims against members.

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INSPRU 8.3.5G

The Society should seek to ensure that the Central Fund provides protection for policyholders so as to minimise the need for Lloyd's policyholders to have recourse to the compensation scheme.

INSPRU 8.3.6G

The Society should seek, and take appropriate account of, the FSA's views on all proposed changes in its arrangements relating to the Central Fund.

INSPRU 8.3.7D

The Society must, in the exercise of its powers to make payments from the Central Fund or to provide other forms of financial assistance from the Central Fund, ensure that in calculating and determining the amount of any such payment or the amount of any other financial assistance, it takes no account of the amounts of compensation which policyholders may receive under the provisions of the compensation scheme in respect of protected claims against members.