Lord James of Blackheath
Main Page: Lord James of Blackheath (Conservative - Life peer)Department Debates - View all Lord James of Blackheath's debates with the HM Treasury
(12 years, 1 month ago)
Lords ChamberMy Lords, I completely agree with my noble friend Lord Marlesford that the reputational consequences here are very serious. I stress the point that this is not simply a London or a UK banks’ issue as it appears. The inquiries clearly cover other regulators and other banks and we will see where they go. However, it is precisely because of the significant reputational damage that the Chancellor has come forward immediately with his response, which I repeated this afternoon.
On the question of Lloyd’s of London, without repeating the tortured and difficult history there, it is worth saying that after a long and difficult period for that market, Lloyd’s of London is at the forefront again of the world’s specialist insurance market. It has a critical position and is, I believe, stronger than ever. While we certainly do not want to go through a long and difficult period, as Lloyd’s of London did, it does show that well-regulated markets in London are capable of leading the way in innovation and value-adding in financial markets.
I make one observation, perhaps as a correction of the comment made by the noble Lord, Lord Marlesford. I speak as the former chairman of the committee that created Equitas for the solution of the Lloyd’s of London problem and put in place the Equitas solution. The difficulties with Lloyd’s of London were caused, to a very large extent, by another great failure of regulation by a parallel market in America. It was not wholly a United Kingdom problem. The problems of Lloyd’s of London were exacerbated to an alarming extent by the failure of the US authorities to regulate the clubs that were put together for litigation purposes on a group class action basis relating to asbestosis, which allowed open, free entry to anyone who wanted to join, regardless of the fact that they had never been near a scrap of asbestos in their whole life. This is what created the enormity of the problem. It was a massive failure of regulation by the USA authorities that undermined a major institution, and we should not forget that. These things are never isolated.
My Lords, I am always interested by my noble friend Lord James of Blackheath’s sometimes remarkable interventions. I think we are a little off the LIBOR case at the moment.