The Council of Lloyd’s has concluded that former chief executive John Neal’s conduct fell “significantly below” the standards expected of Lloyd’s senior leaders, following an investigation that also identified failures in the Corporation’s governance and whistleblowing processes, while market leaders said the focus now shifts to restoring confidence and embedding reforms.
Based on the findings of the investigation, conducted with the support of external legal counsel, the Council of Lloyd’s found that the relationship between Neal and the former Corporate Affairs Director, Rebekah Clement, was sufficiently close during their employment at Lloyd’s that it could be viewed as creating a perceived conflict of interest.
The Council found that this failure to disclose constituted a breach by both Neal and Clement of Lloyd’s global compliance policy and procedures, which clearly state that any conflict of interest, including perceived conflicts of interest, must be disclosed.
“This compliance failure resulted in a missed opportunity for Lloyd’s to put steps in place to manage any conflict of interest,” the Council of Lloyd’s added.
Meanwhile, the investigation found that senior individuals at Lloyd’s raised concerns directly with Neal during his employment at Lloyd’s regarding the nature of his relationship with Clement. Neal acknowledged both the concerns and his responsibilities to Lloyd’s.
The Council of Lloyd’s explained that he undertook to modify his conduct. However, the investigation found no evidence of material change in Neal’s conduct thereafter.
The Council of Lloyd’s continued, “The Council has concluded that Neal’s failure to address these concerns, after they had been raised with him directly on more than one occasion, fell significantly below the standards of judgement, transparency and accountability expected of a Lloyd’s Chief Executive.
“In addition, the Council found that Neal failed to ensure that certain whistleblowing reports made in November 2023 were properly handled in line with his responsibilities as a Chief Executive.”
The Council of Lloyd’s considers that Neal’s conduct therefore constitutes a breach of the Lloyd’s compliance policy and his employment contract.
“Additionally, the Council has concluded that Ms Clement should have modified her behaviours given she was aware of rumours regarding the nature of her relationship with Neal and should have disclosed the perceived conflict of interest with Neal.
“The conduct of both Neal and Ms Clement resulted in reputational damage to Lloyd’s Corporation and the Lloyd’s market.”
According to the Council of Lloyd’s, shortly after taking up his new role last year as Chair of Lloyd’s, Sir Charles Roxburgh commissioned a thorough review of the Lloyd’s governance arrangements.
As a result, and in line with best practice, Lloyd’s has already adopted a wide range of measures to strengthen its governance.
These include heightened Council oversight, revised committee structures, changes to senior appointment procedures, enhanced disclosure requirements and a duty of candour being imposed on the Chief Executive.
Lloyd’s added, “In addition, as findings emerged throughout the investigation, further improvements were made to strengthen processes around conflict resolution and provide greater clarity and stronger controls on the escalation process for whistleblowing reports.
“Now that the investigation has concluded, Lloyd’s is in the process of updating its Code of Conduct, including guidelines around the use of social media and personal relationships at work.”
Sir Charles Roxburgh commented, “Trust, integrity and effective oversight are fundamental to Lloyd’s. Based on the findings of this investigation, we have concluded that the conduct of the former Chief Executive fell significantly below the standards expected of him.
“It also established serious failings in the governance standards and in following processes, most worryingly in the handling of whistleblowing reports. These were serious failures that should never have been allowed to happen.
“These findings underline the importance of robust governance structures and processes. Where standards were not best-in-class, we have put that right. However, governance can only ever be part of the answer.
“Culture and personal accountability also play a vital role. That is why the Council of Lloyd’s is unequivocal about the behaviour we expect from everyone, at every level, at the Corporation of Lloyd’s.”
Other key market voices weighed in, with Caroline Wagstaff, CEO of the London Market Group, stating, “For me, this investigation was as much about the future as the past – ensuring the proper protections were in place moving forward. Real people suffered real harms and that can’t happen again.
“How do we ensure behaviours are as we would want them to be for everyone working in the market? This statement suggests a lot of consideration has gone into answering that question and the changes are to be welcomed and supported.”
Sheila Cameron, CEO of the Lloyd’s Market Association, said, “This was clearly an extensive and thorough investigation, interviewing dozens of witnesses and reviewing copious amounts of documentation and other evidence sources over a number of months. My first thoughts are with these witnesses, who bravely spoke up and I applaud them for doing so in what must have been difficult and trying circumstances. Their courageous efforts will ensure the Corporation of Lloyd’s learns lessons that will bring about meaningful change.
“Since taking office just over a year ago, Sir Charles has been unwavering in his commitment to follow the evidence of the investigation and on ensuring the highest standards of corporate governance are applied, as is and should be the role of a strong chair.
“This includes self-reporting Lloyd’s Corporation’s own whistleblowing policy breaches to the FCA. Sir Charles also deserves enormous credit for ensuring that the witnesses’ voices were finally heard as part of this investigation.
“Today’s statement outlines some additional changes that will be needed and that the Corporation of Lloyd’s is committed to implementing these promptly.
“We look forward to working with the Corporation of Lloyd’s on ensuring the market understands these governance changes and supports their implementation. This will have the effect of increasing confidence in the Corporation of Lloyd’s and enhancing the reputation of the wider market.
“Good governance depends not just on processes, checks and balances but importantly on the personal values of those who govern and lead the London insurance market. We must always be prepared to ask the difficult questions and to listen carefully to those who sound an alarm when standards aren’t being upheld.
“It also depends on the integrity of all of us and our determination to do the right thing in our everyday actions, no matter how difficult that may be.
“In London alone, there are 60,000 people working in specialty insurance and the overwhelming majority hold themselves to high standards and have a deep pride in, and passion for, the Lloyd’s marketplace.
“Let’s now focus on supporting the Corporation of Lloyd’s to implement the lessons learned and ensuring that the actions of the few don’t deter the will of the many to make the specialty insurance market a better and stronger place.”
