Lack of mutual awareness needs addressing

There is no doubt that mutuality has so far had a ‘good’ financial crisis in Great Britain. Bar the odd calamity that was Dunfermline – rescued by a mix of government and Nationwide Building Society – financial catastrophe has largely escaped mutually-owned building societies and insurers.

Indeed, it is the former building societies – the likes of Northern Rock, Alliance & Leicester and Bradford & Bingley – and the behaviour of the country’s biggest banks (especially Lloyds and Royal Bank of Scotland) that have largely scarred Britain’s financial services landscape.

But is the general public aware that Britain’s financial mutual sector has offered a big dose of stability in a horribly unstable world? Equally, do IFAs understand that financial mutuals are an alternative choice and carry some special customer-oriented values that stand them apart from the madding crowd? I am not so sure.

Last week I spoke to a friend who is an IFA. She uses LV= for most of her client’s life and protection insurance needs. But she was not even aware that LV= is mutually owned. Her only opinion on LV= was that it offers some of the best-value insurance products in the market. Its ownership, she said, is an “irrelevance” in her decision-making

Her view is not an isolated one. Despite the best efforts of the Building Societies Association and the recently relaunched Association of Financial Mutuals, the mouthpiece for mutual insurers and friendly societies, most consumers and a majority of financial advisers still do not realise that mutuals are far more consumer facing and far better geared up to serve the long-term financial interests of customers.

It is an awareness ‘problem’ that is not just confined to Great Britain. Earlier this month, I spoke at the biannual conference of the Association of Mutual Insurers and Insurance Co-operatives in Europe. The conference was held in Gdansk, Poland, the birthplace of the solidarity movement, and the home of chief solidarity architect Lech Walesa who popped by to make a stirring speech at the gala dinner.

Amice is a splendid organisation run by the equally splendid Gregor Pozniak, whose purpose in life is to ensure the voice of the mutual and co-operative sector in Europe is heard loud and clear. It also lobbies fiercely on behalf of the sector on key issues such as Solvency II, a piece of legislation that in its present form is very mutual-unfriendly and could overwhelm some financial mutuals, forcing them to seek mergers with larger organisations.

Amice represents some 3300 insurers in countries operating right across Europe. Mutually-owned financial services companies are as prevalent in countries such as Germany, France, Holland, Italy and poor old Spain as they are in Great Britain. Indeed, the mutual sector in Europe is far bigger than you would ever imagine, accounting for a quarter of all insurance premiums taken.