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AFM urges government support for mutual societies

In a letter to the government ahead of the Budget, the chief executive of the Association of Financial Mutuals, said firms needed better access to capital in order to help growth within their businesses and to provide effective competition within the insurance sector.

Mr Shaw cited the fact that mutuals saw their income grow by 50 per cent between 2008 and 2012, as a reason for increased support, and called for greater political commitment to combat the advice gap, among a range of reforms.

He said: “Mutuals are run by people who understand their customers’ needs and, in contrast to many of the banks, have a proven focus on helping local communities.

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“The banking crisis showed that now is the right time to get serious about making diversity a reality, with a renewed commitment from the government to work with the sector.”

He also called on the government to do more to help people with small pension pots.

Steve Thomas, chartered financial planner for Surrey-based IFA The Eurofinance Partnership, said: “I definitely think something should be done regarding small pots, especially in the wake of auto-enrolment.”

Key reforms called for by the AFM

• Better access to capital for financial mutuals.

• Increase the maximum investment limit for tax exempt savings plans to £50 a month.

• Simplified legislation for smaller pension pots.

• Increase probate limits to £10,000.