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Lloyd's and Atrium: A cautionary tale of non-financial misconduct

Posted on 18 March 2022

On 16 March 2022, the Lloyd's Enforcement Board issued a Notice of Censure and imposed a fine of over £1,000,000 on Atrium Underwriters Limited in relation to non-financial misconduct. This is the largest fine ever imposed by Lloyd's. 

Lloyd's made clear that the notice "reflects both how unacceptable these circumstances were, and the seriousness with which Lloyd's is treating this issue". It is an example of the importance that financial regulators now place on culture and non-financial misconduct.

Market Bulletin Y5252 sets out Lloyd’s policy towards conduct involving harassment, bullying, discrimination, alcohol or drugs. The Bulletin states that, "of equal importance is the culture of the firm for whom the individual works and whether it supports or tolerates a culture of unacceptable personal behaviour towards others."

The proceedings against Atrium were brought about as a result of what Lloyd's considered were serious failures by the firm and senior managers. A summary of the three charges that Lloyd's brought against Atrium were:

  1. In breach of Principle 8 of the Enforcement Principles: Atrium failed to notify Lloyd’s of the facts and matters relating to an employee’s misconduct, which were all matters of which Lloyd’s ought reasonably to have been informed.
  2. In breach of Principle 6 and/or 10 of the Enforcement Principles
    1. Employee A’s general misconduct was well known within Atrium, including by senior managers, but no adequate steps were taken to deal with it. Atrium failed adequately to protect the junior employee once it became aware of the bullying. In breach of its own procedures and policies, Atrium failed to investigate Employee A’s conduct and apply appropriate disciplinary measures.
    2. Atrium failed properly to identify and investigate complaints made by another employee about Employee A in accordance with its policies in force at the relevant time, and thereby also failed adequately to protect the employee.
    3. Atrium failed to take disciplinary action against Employee A, even though its own investigation made findings of serious misconduct against him and recommended disciplinary action. Instead, Atrium negotiated a settlement package with Employee A, and allowed him to resign from Atrium rather than face disciplinary sanction. This was motivated in part by the desire of a senior manager to protect Atrium from bad publicity as well as the desire to limit the impact on the business unit involved.
    4. Atrium instructed the employee who had complained about Employee A’s conduct not to speak about the outcome of the investigation or the allegations made.
    5. At the conclusion of the internal investigation, Atrium commenced an investigation in accordance with its disciplinary policy into what were and ought to have been treated as retaliatory and victimising complaints made by Employee A against the employee who had raised a complaint against him.
  1. In breach of Principles 6 and 10 of the Lloyd's Principles: Sanctioning and tolerating over a period of a number of years up until 2018 an annual “Boys’ Night Out” during which some male members of staff (including two senior executives in leadership roles) engaged in unprofessional and inappropriate conduct, including initiation games, heavy drinking and making inappropriate and sexualised comments about female colleagues, which were both discriminatory and harassing to female members of staff.

Lloyd's and Atrium settled the action with Atrium agreeing to a public censure, a fine of £1,050,000 and payment of Lloyd's cost in the sum of £562,713.50.

Atrium benefitted from a 30% discount on the fine as it settled the proceedings at the earliest opportunity.


The UK's regulatory focus on non-financial misconduct (including discrimination, harassment, victimisation and bullying) came to the fore in 2018 when the Parliamentary Women and Equalities Committee launched an enquiry into sexual harassment in the workplace and took evidence from Megan Butler the then Executive Director of Supervision at the FCA. The Committee found that regulators had failed to take a sufficiently active role in using their enforcement powers to sanction workplace harassment.

Then following a number of well-publicised incidents of non-financial misconduct, in January 2020 the FCA wrote a "Dear CEO" letter to all regulated wholesale general insurance firms warning about poor culture and making clear that it expects senior managers to embed a healthy workplace culture in their firms.

It is therefore perhaps surprising that Lloyd's (rather than the FCA) is the first to impose a disciplinary sanction against a firm expressly for sanctioning and tolerating discriminatory and harassing behaviour. Despite its recent focus on non-financial misconduct, the FCA has yet to discipline a firm for failure to implement systems and controls to manage these types of risks.

Lloyd's members are subject to disciplinary sanction by both Lloyd's and the FCA, but in most cases the FCA will allow Lloyd's to take primary responsibility to discipline members. The FCA will have been aware and approving of the action taken by Lloyd's. 

Whilst the FCA has been taking a more aggressive role against individuals for non-financial misconduct, we anticipate that the FCA will follow Lloyd's lead and impose disciplinary penalties on firms.  A mitigating factor in Atrium's penalty was the changes it has implemented on culture, diversity and inclusion, including staff engagement surveys and mandatory training for managers. Whether this will be sufficient to create cultural change is yet to be seen, but firms that are yet to address these issues risk following Atrium into enforcement action.

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