Ian Hay Davison, accountant who took on the formidable task of reforming Lloyd’s of London – obituary

Ian Hay Davison (1996): the ‘Wyatt Earp of Lime Street’ - Tom Stockill
Ian Hay Davison (1996): the ‘Wyatt Earp of Lime Street’ - Tom Stockill

Ian Hay Davison, who has died aged 91, was a formidable investigative accountant who, at the Bank of England’s behest, took on the challenge of trying to reform the Lloyd’s insurance market at the nadir of its reputation.

As a partner in the accounting firm of Arthur Andersen in the 1970s, Davison built a track record of fearless exposure of high-profile cases of financial misbehaviour. In December 1982 he was asked by the Governor of the Bank, Gordon Richardson, to apply those skills to Lloyd’s of London, whose tradition of gentlemanly self-regulation had failed to deal effectively with a damaging succession of scandals.

Davison accepted the title of chief executive and deputy chairman of Lloyd’s, and a brief from the Bank to rewrite its rulebook – with some reluctance, he said, but out of personal respect for Richardson. Having arrived with the intention of picking out the “rotten apples”, he swiftly discovered that “The barrel itself… appeared to be infected.”

In return, members of Lloyd’s ruling Committee regarded his appointment as a slight on a historic institution while their chairman Sir Peter Green – an old-school underwriter later fined for his own “discreditable conduct” – nicknamed Davison “the Wyatt Earp of Lime Street”. The City historian David Kynaston wrote: “It would have helped if this undoubtedly intelligent, articulate man had been somewhat more emollient” – but here and elsewhere, emollience was never the Davison modus operandi.

In his own assessment, the most useful outcome of his tenure was greater disclosure, so that Names (individual members of the market, who accepted unlimited liability) could see, often for the first time, the full liabilities of the underwriting syndicates in which they participated.

Among the practices Davison uncovered was the use of “baby syndicates”, reserved for insiders and favoured friends, into which the most attractive business was siphoned – diverting profits from the mass of external Names, many of whom would suffer crippling losses later in the decade. “I would have said that every single member of the Committee was a member of a baby syndicate,” Davison recalled.

Likewise, reinsurance of syndicate risks was often placed at lucrative rates with offshore companies covertly controlled by Lloyd’s underwriting agents – including Peter Green. And when he stood down as chairman it was Davison who pointed out that most of the potential successors were under Inland Revenue investigation at the time. The next chairman, Sir Peter Miller, was more open to reform but was soon at loggerheads with Davison, whose role he sought to play down as “chef de cabinet” to himself as “prime minister”.

That clash was a factor in Davison’s headline-making departure from Lloyd’s in February 1986 – but his resignation was also, he said, “an entirely deliberate act” designed to provoke what happened next, which was a DTI enquiry into Lloyd’s continuing regulatory faults led by Sir Patrick Neill.

Though frustrated by resistance met at every step, and disappointed that neither his nor Neill’s work led to criminal prosecutions, Davison was satisfied he had left his mark on Lloyd’s as “an agent of change”.

Ian Frederic Hay Davison was born at Uxbridge on June 30 1931, the eldest of four children of Eric Hay Davison, chief accountant of the textile manufacturer Courtaulds and later finance director of GEC, and his wife Inez, née Day. At nine, Ian was evacuated for three years to Connecticut, where his hosts and their sons became his second family for life.

He returned to complete his education at Dulwich College and the London School of Economics. His first ambition was to be a barrister but his father pushed him towards accountancy, in which he qualified in 1956, taking third place in national exams.

At the suggestion of his LSE tutor he then applied for a Commonwealth Fund scholarship, which took him to the University of Michigan business school and an internship on Wall Street, before returning in 1959 to join the nascent UK arm of the Chicago-based Arthur Andersen.

Davison dedicated his book to 'the external members on whose behalf the mission was carried out'
Davison dedicated his book to 'the external members on whose behalf the mission was carried out'

He rose to be managing partner in London from 1966 and of the whole UK practice from 1973 to 1983. During his tenure the firm grew from 180 to 2,000 staff.

Tall, fiercely bespectacled and explosively energetic, Davison never ducked a fight: the City columnist Christopher Fildes once observed that “the list of his enemies” was perhaps the greatest accolade of his distinguished career.

As a DTI Inspector in 1975 he uncovered the financial ramifications of the fake suicide and disappearance of the Labour politician John Stonehouse, including a complex web of fraud surrounding a “fringe bank” called London Capital Group.

In 1978, the Treasury asked Davison to investigate Grays Building Society in Essex, whose long-serving secretary Harold Jaggard had committed suicide in his bath. Davison’s work revealed that over a period of 40 years Jaggard had steadily extracted cash at the rate of £1,250 per week, totalling more than the proceeds of the Great Train Robbery, to spend on “women and racing”.

From 1982 to 1984 Davison was chairman of the Accounting Standards Committee. After his Lloyd’s service he built a wide-ranging career as a financial regulator as well as in boardroom and pro bono roles.

Following the crash of October 1987, he conducted a hard-hitting review of Hong Kong’s securities markets. During the 1990s, again at the Bank of England’s calling, he quietly oversaw the run-off of National Mortgage Bank, which (as a collateral victim of the collapse of the fraudulent Bank of Credit & Commerce International) could no longer fund itself in the money markets. And in 2002 he was recruited to chair a regulatory council for Dubai, which had ambitions to become a regional finance hub – but he was ousted two years later after a row over the council’s independence.

His directorships of UK companies included Midland Bank, Cadbury Schweppes and the battery maker Chloride. He was chairman of his friend Terence Conran’s master company Storehouse, of The Independent newspaper and of Credit Lyonnais Capital Markets. Lastly, from 2002-2011, he chaired the investment firm Ruffer.

As a young man Davison had contemplated a career in Conservative politics, fighting the unwinnable Labour seat of Stepney (held by Peter Shore) in the 1964 general election and serving as a borough councillor in Greenwich. In later life his non-business commitments focused chiefly on the arts, as a trustee of the V&A and chairman of its trading arm, a director of the Royal Opera House; president of the Monteverdi Trust; chairman of Sadler’s Wells; pro-provost of the Royal College of Art; and a council member of the National Trust.

He was also president of the National Council for One-Parent Families, chairman of the mental health charity Sane and Wells Cathedral Trust, and a governor of the LSE. A passionate enthusiast for trains, he was a member of the Railway Heritage Committee and a leader of the successful campaign to reopen Templecombe station near his then home in Somerset in 1983.

He also found time for bell-ringing, latterly at Bath Abbey. When walking became difficult, he clattered cheerfully around Bath and central London on a mobility scooter.

He published, in 1987, A View of the Room, an account of his Lloyd’s experience which he dedicated to “the external members… on whose behalf the mission was carried out”. He was appointed CBE in 2003.

Ian Hay Davison married, in 1955, Maureen “Morny” Blacker, who survives him with their son and two daughters.

Ian Hay Davison, born June 30 1931, died September 20 2022